This is the default option selected for each password policy because it does not force mass password resets in the target systems. During the create event for a user, they will be given a password based on their associated policy and that password will be used to create their accounts in downstream systems. Passwords will not sync with existing users until they set their password via self-service, an administrator triggers a delegated action, or a pre-configured action is run by RapidIdentity Connect.
Once a listed action occurs, the attribute idautoPersonPasswordSet is set to TRUE, which allows that action and subsequent changes to be synced downstream. This allows a password sync to occur:
During user creation
During a target sync if the user has set their password before in RapidIdentity
During any password update