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App passwords are currently unavailable for all Yahoo Mail users. As you can see it on Yahoo's feedback page, a lot of people are complaining about this problem.
Yahoo provided an answer on June 1, 2022 which is:
We’re very sorry app passwords are currently unavailable for Yahoo Mail accounts. Rest assured, you can still access your mail from the Yahoo Mail app or via a web browser. We apologize for any inconvenience this may cause you.
The problem isn't new, and unfortunately, there's still no solution at this time.
June 13, 2023 - source:
[...] we’ve made the process to create App Specific Passwords more secure. This can result in some difficulty when trying to set up an ASP from a new device. Please ensure that you try creating an app password without using an Incognito browser and use a browser where you have signed into that account in the past, for at least a couple of days. If this is not successful, there may not be a workaround; as we don't know if or when this feature will be available, we encourage you to use Webmail or the Yahoo Mail app to access your email. [...]
Yahoo turned off the function and I suspect they are trying to force us into the Yahoo mail browser and paid Yahoo + ...everyone is going nuts. I've used my yahoo in Outlook for 27 years...time to change!
I had the same problem.
I took my iPhone and tried on the yahoo mail app, generate new app password and it worked!
I don't know whether I was just lucky or what.
Hope that it works for you.
What app name did you use?
Maybe that is what made it work.
I was able to generate a password on an old yahoo account using 'Outlook' as the app name, but was not able to generate a password on a newer Yahoo account using the same browser, web page and name.
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I had an issue and lost my app password (for Outlook Desktop) on 19 Jan 2023, and like many I could not get a new app password. Yahoo support rep. told me that the function would be repaired after 48 hours. I have been checking every few days, and last checked Monday or Tuesday this week. Every time I received the "function not available" message shown below.
Finally this morning I WAS able to generate the app password that I needed.
Outlook is now receiving all my yahoo mail again.
Old error message: