Per https://help.shopify.com/en/partners/dashboard/managing-stores/development-stores#the-development-store-password-page, it states that the password can only be removed once the store has been transferred or switch to a paid plan.
You can remove the password page only after you transfer the store to a merchant or switch the store to a paid plan.
However, it is still possible to remove the password by using the GraphQL PreferencesSave operation.
The store is now paswordless.
Disable development store password