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Its not specifically "password" as a password that is the problem. It means it will only look at the first 8 characters of your password. This only occurs if you've not changed your password recently. If you've got a decent password then you're still fairly safe anyway but go change it anyway just to be sure.
The technical reason for this is that Amazon changed the way they hash passwords at some point in the past. The original system only cared about the first 8 characters only. The new system looks at the whole password. Its hashed because they don't want peoples passwords sitting around in their database in the clear. They can't convert from the old system to the new system as they don't store your original password.
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