They fill out some contact information, including the Email and then get a password sent to them by Email. This is to verify that the Email is valid.
New users have the right to add talks to the Discussion pages or other rights if configured by the System administrator.
If the user has lost the password, a new one can be created. The old cannot be recovered, it is not saved in the wiki, only a MD5-footprint of it.
The system administrator can also give some more detailed rights using the User pages and he can also define some passwords using the Special:Passwords page.
The easiest way to create a new user is to go to the Special:Passwords page. Then fill in username, password, email. If you want to copy the rights of another user, add it in the field User Template. The special page then creates a draft for a new user page you can preview and then modify.