The shared family password is set up by the person who first created your household. New family members who are added to your household will need to use this shared family password to initially log in.
Once family members have joined your household they will have the option, by going into Settings > My account > Profile, to set a personal password. If they do this their personal password will be required to log in to their account in the future.
The creation of a personal password will also restrict other family members from being able to automatically switch to their account in the Family section of the app. If their personal password is subsequently changed so it’s the same as the shared family password, family members will be able to automatically switch to their account again.