The password manager is typically on a machine you control. If your machine is owned, you've got issues regardless. A password manager provides a way to effectively utilize higher-entropy, per-account passwords. As with all security-related matters, it's a tradeoff. I expect many choose password managers for this reason.
In terms of physical control of the machine? In terms of what software is loaded on the machine? Would you elaborate on what you mean "typical password manager user" and "does not control"?
