There's a lot of problems with passwords on the Web. Almost every website you visit requires one, you can't possibly remember 101 different passwords so you re-use a few easy-to-remember ones. To make them easy to remember you pick simple words or names that mean something to you. The result is that most people use passwords that are very easy for someone else to work out using guess-work or automated software. See this and this, if you value your privacy then you should pick stronger passwords.
The first number is the length of your password. Many websites that ask for a password required that you include some symbols and punctuation so the second and third boxes cover this: the second box is the minimum number of symbols to include and the third box is the symbols themselves. Note that symbols are only included in your password once so if you enter six into the number of symbols you have to enter at least six symbol characters to use.
Hell, no! Using a strong password means it is less likely that someone else will work out your password but there's still ways for them to obtain it (read the Wired article linked above). When people are trying to work out your password they are not doing it manually, they are using a computer that tries 100,000s of diferent combinations a second - if your password is 'letmein' then they are going to find it pretty damn quick.
I know, so write them down.
What's that you say? Writing passwords down is a bad idea? Sometimes it is and sometimes it isn't. If you are using a private computer in your home then writing your passwords down is a lot safer than using weak passwords that you can remember - you are far more likely to have your password stolen by a hacker attacking a website on which your password is stored than by having a piece of paper lifted from your home.
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