The customers in your shop can choose to create a customer account during the ordering process. When a customer orders as a guest, they can choose to register as a customer. In that case, they choose a password. The customer can then use this information when they order again, and thus avoids having to fill in their information again.
The registered customers can also log in to the shop by clicking the customer icon on the top right in the shop and can then e.g. see their previous orders or change their details. Customers can also register without making an order by clicking the same customer icon in the top right corner.
When you go to Customers in the store administration, you can see which customers are registered because they are marked with this icon:
More information on how to manage customers can be found on the Customer management page.