Automatic creation of password is exactly that: it automatically creates passwords for your users. These are random passwords, which are immediately encoded during the member import. This means that you cannot retrieve these passwords to send to users. Also, you cannot import your own passwords. From the in-add-on instructions:
For security reasons, the Password field cannot be imported. If a new member is being created, a random password will be created automatically.
However, after having their account imported/created, users can update their account with their own passwords by using EE's forgot password functionality.