Accounts

Like any modern personal computing platform, Windows 11 requires you to sign in to the system using an account that represents your identity on the PC and the settings, documents, and apps associated with that identity.
Defaults
Increasingly, that Windows 11 sign-in account is a so-called online account, which can be a Microsoft account (MSA, used by individuals) or a Microsoft Work or School account (MWSA, used by businesses, schools, and other managed organizations). Microsoft makes this difficult, but you can still sign in with a local account that is only available on that one PC. There are pros and cons to each.

Windows 11 sign-in accounts consist of some or all of the following:

Account name. This is an email address like [email protected] for online accounts or any alphanumeric name like paul for a local account.
Friendly name. This is typically your real name, like Paul Thurrott.
Password. This may have complexity and length requirements for online accounts but is optional for local accounts.
Permission level. The first sign-in account you create on a PC is given Administrator privileges so that person can complete any tasks, including those that may be destructive and could impact other users on the PC. Subsequent sign-in accounts are given Standard account privileges by default. This type of account can install some apps and configure the environment to their liking, But they cannot complete tasks that might be destructive or impact other users without getting authorization from someone on that PC with administrator privileges.
PIN. If you sign in to Windows 11 with an online account or a local account with a password, you must make a PIN for additional security. It's also easier to sign in with a PIN than a password, since a PIN is usually shorter and easier to remember.
Biometric authentication. Optionally and depending on the capabilities of your PC, you can enroll in Windows Hello fingerprint and/or facial recognition, biometric authentication methods that make it even easier to sign in.
Passkey. When you sign in to a PC using an online account--again, an MSA or MWSA--Windows 11 creates a device-bound passkey, a simple and secure alternative to a password. This passkey is used to simplify passthrough authentication so you can open apps like Microsoft Edge, Microsoft Store, OneDrive, and others and immediately use your identity in Windows with those apps without having to sign in again each time.

When you perform a clean install of Windows 11 on a new or recently reset PC, you have to sign in to an online account or create a local account during the Out-of-Box Experience (OOBE) to complete the process and begin using Windows.

If you are setting up Windows 11 Home, you only presented with a single option, to sign-in with a Microsoft account. This begins with the "Unlock your Microsoft experience" step.

But if you are setting up Windows 11 Pro, you will see the "How would you like to set up...