It seems like the benefits are having the device lock/wipe itself after a set amount of attempts in case of a brute force attack and not having to run software to decrypt the drive on the device you plug it into.
I included a picture of the IronKey Keypad 200 but that's just because it's the first result that came up when I was looking for an example. There seem to be a few other manufacturers and models out there and they probably have different features.
I am curious what do you think of them? Do you think they are useful? Do you find it more a novelty?
It was an ExplainingComputers video titled Very Useful Small Computing Things that made me think of them.
Couldn't the data be cloned and cracked off device without having to worry about the pin code?
Yes, but it's meant to be difficult to do. Encryption algorithms are designed and chosen to be expensive to crack, so that you'd need NSA-level clusters to find the key in our lifetime.
I don't know if you could attack the encryption controller itself to brute-force the PIN to release the key. I assume in theory it's possible, but unless you're a very desirable target, they probably won't spend the effort, and attack something weaker. Like your cell phone, or your kneecaps.
If they did it right it'd not store the key, but instead use something like PBKDF2