Odd, worrying alert: Use not usual username's pass for sensitive data in iCloud??

So I have an install of Catalina that isn't my main installation, and doesn't have a copy of my main login on it, hence I'm logged in using another admin-level account (shown) with a different password. I'm getting this alert in System Preferences..Apple ID.

(related question https://apple.stackexchange.com/questions/394399/why-am-i-being-asked-for-local-password-in-update-apple-id-settings )

Safe (in terms of security and data corruption) to use same AppleID with different MacOS logins? I'm wondering / thinking of how this could get messed up... Not to mention what about the case of same userid and Apple ID, but different passwords? So strange. Haven't found a good explanation of what Apple is doing here...

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