The password feature can be used in quite a few different ways. I've seen some models who, after reaching their room goal, will start a password show instead of a ticket show. They have to privately message the password to all of the viewers who have gained access to the show.
A lot of broadcasters will use the password feature to test out their stream without an audience. They want to see how their stream looks and sounds, but they aren't ready to start their public stream yet.
A lot of members/viewers will keep passwords on their room for the privacy factor, especially when they are tipping a model for C2C, so that only the broadcaster who has been tipped to view their cam is able to enter their room, instead of random spectators.
Some members prefer password shows over the typical private show structure (maybe they don't like feeling rushed by seeing their token balance steadily decreasing while in a private show) so some models will sell password shows - usually at a high price, because putting a password on your room removes you from the homepage and makes your room unable to be found by any other users browsing the site.
Lastly, I think on CB (compared to other cam sites) it is a lot more common for some models to visit and interact in the chat room's of their other model friends. I've heard it can be good etiquette for model A to put a password on her room, while visiting model B's room; so that when viewers get curious about who this other model chatting in model B's room is, they are unable to go to model A's room and follow her while they are watching model B's show. Of course, they could just note model A's username and go follow her later, when the password is taken off. I have noticed there is a good community feel among models on CB, so usually if model A comes into model B's room (and they are friendly with each other), model B will encourage her viewers to go follow and support model A as well, which makes putting a password on model A's room kind of pointless in this situation, but I do understand the reasoning behind it!
There are probably more reasons I haven't listed here, like what blayze_noir said, they could just be taking a break and want their page to appear as if it's "closed," for whatever reason.
Hope this all made sense!
