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iCloud password option for local users removed in OS X 10.11.4’s Users & Groups preference pane
Starting in OS X Yosemite, Apple introduced a new option to log into your Mac using the password associated with an Apple ID. As of OS X 10.11.4, this option seems to have been removed from the Users & Groups preference pane in System Preferences.
OS X 10.11.3:
OS X 10.11.4:
Apple’s KBase article describing how to set up users on OS X El Capitan was last updated on April 13, 2016. It does not include any information on using an iCloud password for a new user account.
This option still appears to be available on OS X 10.11.4 via Apple’s Setup Assistant. If you’re setting up a Mac for the first time and sign into iCloud as part of the setup process, you will be given the option of using your iCloud account to log in.
Categories: Mac administration, Mac OS X
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Der Flounder 
It appears the password change dialog now has an extra step for iCloud users, before changing the password, it says ‘“Richard Smith” is using an iCloud password to log in and unlock the screen.’ and asks ‘Do you want to change your iCloud password, or stop using your iCloud password to unlock this Mac and create a separate password?’. Choices are ‘Use Separate Password…’, ‘Cancel’, or ‘Change iCloud Password…’.
I was forced to change my password and log out of iCloud on my 2015 MBP as iCloud was constantly asking for password. I reset my iCloud password and logged back in to iCloud on MBP, now don’t have the option to use iCloud password when changing the password for the user. I am the administrator, if that is of relevance?