I believe what's going on is Microsoft is trying to go passwordless even on Windows user profiles and it's somewhat shooting themselves in the foot in terms of compatibility. The password would 'expire' in terms of it being used for any authorization and then you only have a PIN left, which is a good thing as a PIN would be easily bruteable. Logging in with the Password enabled instead of the PIN effectively re-activates it and allows it to be used for authorization again.