Not understanding why I should use public/private key encryption over password?

My knowledge about these topics is very elementary, please “school me” if I said something completely wrong, it would surely help me understand these things better. Now, to my issue.

Now that I have a laptop and didn’t encrypt the entire disk during installation I was looking for ways to encrypt some particular folder or files. I found two different ways to protect the files but I don’t grasp the difference between the two: password and a pair of public/private key.

Option 1: I encrypt a file and to decrypt it I have to insert a password, I’m ok with that and understand it.

Option 2: I want to instead use a pair of public/private keys. So I generate the pair and I encrypt the file with the public key. At this point, when I create the private key, I should password protect it, otherwise anyone that has access to my laptop can access and use the key and be therefore able to decrypt the file.

So what’s the point of using a private key instead of a password if the private key itself is password protected? Why wouldn’t I want to straightforwardly use option 1?

Sorry for my lack of understanding about these topics, feel free to explain it to me like I’m 5.