sftpfs uses password authentication over keyboard-interactive authentication, thus we need to set: PasswordAuthentication yes in /etc/ssh/sshd_config. pkg-descr or pkg-message should advise the users of this fact. I had to turn on debugging in sshd to learn that sftpfs uses password authentication and not keyboard-interactive authentication. Maybe upstream should consider adding keyboard-interactive and/or publickey authentication.
Maintainer feedback?
Sorry, due to a lack of time I have reset the maintership of this port. Hopefully someone else is able to step in to help. Resetting the assignee of this bug accordingly.