I kind of found a solution when looking for this 'Pubkey auth attempt with unknown algo for'
After I added these options and changed my key from ed25519 to rsa (3072)
Code:
ssh -i ~/.ssh/id_kindle root@192.168.2.2 -o HostKeyAlgorithms=+ssh-rsa -o PubkeyAcceptedAlgorithms=+ssh-rsa
I finally could connect properly without giving any password

Actually it works even when I don't specify my key like above so ssh-agent is working fine as well.
I tried also with RSA 4096 and worked as well on both Dropbear and OpenSSH and it's working.
Trying to change to ed25519 didn't work yet but I guess I don't need it anymore or will look for specific options later (I tried '+ssh-ed25519' but there might be a different option).
In the end I checked and with only this one option I can login with my RSA key so this is a solution:
Code:
ssh root@192.168.2.2 -o PubkeyAcceptedAlgorithms=+ssh-rsa
Of course one could make it permanent so that there is no need to specify it in the CLI anymore:
Code:
vim ~/.ssh/config
Host k3
Hostname k3
User root
HostKeyAlgorithms ssh-rsa
PubkeyAcceptedAlgorithms ssh-rsa
The question is though why there is no information on the forum or in the instructions and why is this needed?
Nobody faced this issue or maybe nobody uses ssh keys?