If you mistype your password, hitting backspace does not visually remove *s, but if you hit it and then start typing they disappear appropriately to where they should have.
For example:
1) You beging typing your password, let's say it is password, but actually type "paasw" before realizing you mistyped:
*****
2) You hit backspace 3 times to erase the "asw":
*****
3) you are confused, but type "s"
***
The password works. This does not occur with delete. Using mouse or arrows to update position does not visually update cursor position in this field.