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Justin Schuh defended Google's reasoning in the wake of this post detailing the "discovery" (sic) that passwords saved in the Chrome password manager can be viewed in plaintext. Let me just directly
There are three cases when your password can be leaked: Any direct access to your google account (Gmail) Any access to your synced devices. Google vulnerabilities. If configure your google account security options correctly, it's safe to use this option. However you can Turn-off this feature or just use the (local) browser save password option.
Encryption does not necessarily make your passwords safe. Though users will ask for the admin password when viewing passwords on mac, it cannot prevent privileged programs from accessing your passwords. Centrally Manage your Account Info. Well, this is not a pro but a con. Google may encrypt your passwords in the cloud.
If you have 2 factor auth set up on your Google account and have a strong password, chances are low for someone to be able to login by themselves. If you are a bit careless and leave your phone/tablet/laptop lying around with easy access for people, maybe they can just open the app and view the file if they know what they are looking for.
2. On typical Linux desktop systems Chrome will use the session keyring (i. e. GNOME Keyring or KWallet which cover the vast majority of Linux desktop installations) which encrypts passwords with a key derived from the user account password for storage. – David Foerster.
The only real difference might be that you could want to prefer open source password managers, which Google password storage is not. I will leave it up to you to decide if this is important. There are other issues that are not specific to Google, such as vulnerabilities being found in the software or not securing your device.
If you use a Master Password, the Sync key is unencrypted from the moment you enter it into Firefox. The Sync key is available from your browser. Go to Options/Firefox Sync, click the "Manage Account" tool, pick "My recovery key", and it will produce a printable version of your key.
The Password Manager. There are several kinds of password managers each with their own set of benefits and flaws. One immense improvement over a safe is that most password managers can generate lengthy, randomized passwords that would be incredibly hard to guess. There are also differences in the sorts of digital password managers you could use.
While that doesn't completely protect you, it is much better than a built-in password manager. Better configurability. A browser's built-in password manager may struggle with sites which have less than desirable password policies, so a dedicated password manager can generate passwords according to a specified ruleset. Works outside the browser.
Encryption is just a way of making the info you save to Google more secure. Using a unique key, your info is made impossible to read by anyone else. Then, the only way to read the information is by unlocking it with the same unique key. This unique key is stored on Google's server and google can use it to decrypt your data without your consent.