The fact that password_file is only mentioned in Use on third-party wikis explains why so few people are able to find it.
Could it be worth setting up a separate page for the various ways in which login credentials can be stored/passed around? (I'm not even sure where the bot default saves the password when you enter it). That way there is also a very natural place for BotPasswords + OAuth to be linked from.
I think this should just be part of the 'configuring pywikibot' page. We might also want to add support for bot passwords in generate_user_files.py -- I think that's how most people configure their bot.
A configuring pywikibot page would also work for me. The only thing I can find right now though is Manual:Pywikibot/Installation#Configuring Pywikibot which in essence says "run login.py". Or is there another page somewhere? Good point about generate_user_files.py Now task T143905
Right, 'run login.py' essentially means 'run generate_user_files.py' (which is automatically run if no user-config.py is present), so the documentation would be OK if T142905 is resolved.