You can login to a remote computer, using whatever commands you
would from a regular terminal (e.g., using the ssh or
rlogin commands), from a Term window.
A program that asks you for a password will normally suppress echoing of the password, so the password will not show up in the buffer. This will happen just as if you were using a real terminal, if the buffer is in char mode. If it is in line mode, the password is temporarily visible, but will be erased when you hit return. (This happens automatically; there is no special password processing.)
When you log in to a different machine, you need to specify the type of terminal you're using, by setting the TERM environment variable in the environment for the remote login command. (If you use bash, you do that by writing the variable assignment before the remote login command, without a separating comma.) Terminal types ‘ansi’ or ‘vt100’ will work on most systems.