So from what I read, in15.5 it doesn't work properly it only works as a "hint" that compliant an ssh clients respect, but does not actually enforce it the server side.

  On your ubuntu side the ssh client is following  the hint sent by the router, that only the public key is allowed and stops. But ansible uses paramiko, which ignores that and tries a password anyway. You can update the etc/ansible/hosts to use the ...