A professional never keeps a password.
It records a hash.

A hash is generated by a mathematical function from the user's password.
When the user enters his password, the software calculates the hash and sends it to the server which compares it with the hash it has stored. If the two hashes match, then the user knows the password, and is authenticated. If someone sniffs the messages, he won't see the password, just the Hash.
Knowing the Hash, it is complicated to retrieve the password.
To calculate a Hash of the password '123456' with the MD5 function, use the following command in the terminal :
$ printf '123456' | md5sum
123456 will always give the same MD5 Hash.

The MD5 function has been widely used in the past, but the power of today's processors requires the use of more complex functions to be cracked such as SHA1, SHA256 or SHA512.
. The size of the hash increases with the complexity of the algorithm.

printf '123456' | sha1sum

printf '123456' | sha256sum

Note: we use 'printf' and not 'echo' for a hash calculation. Echo adds a line break which is taken into account by the Hash.

Longer Hashes are more complicated to break, but it is still possible to pre-calculate them for common passwords such as the ones found in RockYou list.

To avoid the pre-calculation of Hash, we use Salts.
These are additional values that are added at the beginning of the password before calculating the Hash.
The hash check remains fast, but the pre-calculated tables become useless, they have to be recalculated for each Salt.

Compute the hash of 123456, with the Salt ABCDE, and the Hash MD5 function in python:

$ python3 -c "import crypt; print(crypt.crypt('123456', '$1$ABCDE$'))"

With openssl: -1: MD5 password, -5:SHA256 and -6:SHA512

$ openssl passwd -1 -salt ABCDE  123456

The result is : $1$ABCDE$Kn5RIMYO1QXy7GtJysNSC1
Composed by three fields $xx$xx$xx :
$1 : hash function is MD5 ($5 SHA256, $6 SHA512)
$ABCDE : Salt
$Kn5RIMYO1QXy7GtJysNSC1 : MD5 hash of 123456+salt