If you view the in-game tutorial, at the screen where Todd is green, press the Option 1 button to start a minigame where you press the A or B button rapidly to pump up zits until they explode.
These passwords are for the suspense setting.
Transposing the third and fifth characters of your password will often take you to a new place in a different adventure. Early passwords in Adventure #1, when transposed, will take you to the end of Adventure #6, way beyond the false exits.