First, if you have recently authenticated via password. Once you use your password once, your mail client will remember it, and the mail server will remember that you have authenticated. This way you are not asked for your password any longer.
Second, and the more frequent, mail clients can be configured to do POP3 before SMTP. If the SMTP server sees you authenticate to the POP3 server, it will grant your IP access to sending mail through the SMTP server, even though you haven't put in your SMTP password. There is usually a setting to configure this 'POP before SMTP' authentication method in each mail client.
Also, if you are using your ISP's mail server, they most likely won't ask you for a password as they typically have strict Access Control Lists (ACLs) in which blocks everyone but their clients.
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