No one in their right mind is storing plain text passwords, or letting them anywhere near the database.
You convert the password to a hash, and store that. And the hash will look nothing like the password the user typed.
You’re right. No one in their right mind would do that.
On the other hand, people not in their right mind often run things. Such as my old professional liability insurance. Which wrote the username and password in the yearly statements…
And also sent you the password through email if you forgot it…
Also you couldn’t change it…
There was a popular companion app to a game I play that’s stored passwords as MD5 hashes for years and when they got hacked they were able to decrypt everything.
Bonus point, the app was released multiple years after md5 was cracked.
Developers (including myself) cannot be trusted to implement the correct process 100% of the time. It’s happened too many times for it to be a single person issue and has transcended into a problem with software engineers