That is, if we just put inputs in the form like key=123, response=456, users could pick their own keys by changing the value of key and then generating the correct response. That's probably fine, but maybe attackers could somehow force users to pick known keys in combination with other unknown vulnerabilities that might exist in the future. Instead, we generate a random key and keep track of it to make sure nothing funny is afoot.
As an additional barrier, we do the standard "store the digest, not the real key" sort of thing so you can't force a known value even if you can read the database (although this is mostly pointless since you can just read TOTP secrets directly if you can read the database). But it's pretty standard and doesn't hurt anything.
Update this from SHA1 to SHA256. This will break any TOTP factors which someone was in the middle of adding during a Phabricator upgrade, but that seems reasonable. They'll get a sensible failure mode.