The files in the /etc/skel directory are used by the:

The `pwconv` command creates shadow password and group files from `/etc/passwd` and `/etc/group`.

The `pwunconv` command reverses `pwconv`, merging shadow password and group files back into their non-shadow counterparts.

The `useradd` command, when creating a new user account, copies the contents of the `/etc/skel` directory into the newly created user's home directory, providing them with initial configuration files such as shell dotfiles.

The `passwd` command is used to change a user's password, not to manage initial home directory contents.