Password Protection keeps unauthorized people from reading your documents. When saving a document, you'll be asked to enter a password twice for confirmation. To open the document, you'll have to enter the correct password.
When checking this option, you'll be prompted to type the word YES to confirm your decision to put passwords on all documents.
When saving, an Allow Viewing/Printing without Password option lets you make the document viewable and printable to anyone without the password, if checked. They won't be able to edit or save the document.