I have discovered that the shadow passwords option are not enabled by default after install on wattOS R8.
You don't "have" to change, but using shadow passwords is considered a best practice, and something that should be used on most modern systems unless there is a specific reason to not. Its an option on a typical new advanced Debian install to turn it on or not.
Your passwords are still SHA-512 hashed as they should be, but enabling shadow passwords moves the information to a more secure - root accessible only shadow file
The good news is that its really easy to change.
Open a terminal and enter the command
'sudo pwconv'
enter your password, and its done. I suggest then rebooting and continue working as usual. You will likely not encounter any differences or issues.