Worked out my own problem seconds later, all it took was my forum post to think of a new thing…
I saw a hint on this page:
https://pi-hole.net/blog/2022/11/17/upcoming-changes-authentication-for-more-api-endpoints-required/#page-content
The password netdata is expecting in the password field is the token from setupVars.conf and not the actual password.
jobs:
- name: pihole
url: http://172.69.0.53
setup_vars_path: /etc/pihole/setupVars.conf
password: <WEBPASSWORD from setupVars.conf>