Edit: obligatory explanation (thanks mods for squaring me away)…
What you see via the UI isn’t “all that exists”. Unlike Reddit, where everything is a black box, there are a lot more eyeballs who can see “under the hood”. Any instance admin, proper or rogue, gets a ton of information that users won’t normally see. The attached example demonstrates that while users will only see upvote/downvote tallies, admins can see who actually performed those actions.
Edit: To clarify, not just YOUR instance admin gets this info. This is ANY instance admin across the Fediverse.
I didn’t look at Lemmy’s source but I’m pretty sure it is hashed. The thing is, password is hashed in the database only to protect users in case database gets hacked. But a bad admin of the server can always just change the code and nobody would know. When it comes to websites, open source doesn’t provide any additional security, since everything that happens on the server is a black box. I’m not an expert on this though. Correct me if I’m wrong
If it’s hashed it’s impossible to see your password (hashing is a one way process, it’s not encrypted). However nothing prevents someone from running a modded instance if they want to harvest passwords.