Let’s keep the terminology clear (and it’s important, not pedantic)…
There is no password on a sync location. There is an encryption key. Its function is to scramble the data when syncing and allows storing the sync data in an encrypted state.
There is no encryption key on a database. There is a password. It does not encrypt anything. A password is the same as the key to a safe or a door. Only those with a key, those using the key, can open and get into it. So applying a password in the Database Properties is only used for importing databases via sync, effectively making sure the device importing it has the “key to the door”.
Both a database password and an encryption key are optional.
on my Mac I had to choose a new password, which I had to type twice, which I understand.
Can you clarify where you had to choose a new password?