How is Firefox password sync safe?

Sync is more reliable in terms you don't have to worry about LastPass going out of business. Also my experience with the LastPass software is not so good - I like the Firefox sync more.

The passwords are encrypted in browser before sending them to the sync server. Should you lose the encryption key ( nowadays 26 digits ) it is not possible to get the passwords.

Your concern should go to whether Lastpass is in business in 10 years, if you get malicious software on your computer reading keyboard or harddrive and whether you sync your passwords to unsecure computer on later time.

Personally, I would use LastPass instead. They offer two factor authentication like smartcards, their grid system, mobile text or USBkey. They also offer one time use passwords (for public logins).

They also offer an offline mode. It's also far easier to use and supports even the funkiest login screens.

Another handy feature is sharing a login without sharing the password.