If more than one person is using your Linux machine at home, or you are managing a server that provides access to multiple users, the useradd command is essential for creating users.
Also, many of the services you use as a developer may require their own user accounts to function. So even as a solo dev on your own machine, you may find yourself reaching for these commands when you install MySQL or something similar.
You can get a full overview of the various options available to you by viewing the man page for the utility: man useradd
But if that is overwhelming, here's a breakdown of some of the common options you might use when creating a user.
Create a user
The simple format for this command is useradd [options] USERNAME.
For example useradd test (as the root user - prefix with sudo if you are not logged in as root).
This will create a user called test, but it's a limited operation and will not create other useful things like their home directory or password!
Add a password
You then add a password for the test user by using the passwd command: passwd test. This will prompt you to enter a password for the user.
There is an option for adding an encrypted password via the -p option on useradd, but this is not recommended for security purposes.
Note that the -p option doesn't allow you to input a plaintext password, it expects you to encrypt it first. This is intentionally difficult, because you should not do it! Just use the passwd command.
Other common options
Home directories
In order to create a user with the default home directory use the following option:
useradd -m test
This user now has a /home/test directory.
To change the home directory, you can pass an extra option to modify this, for example:
useradd -m -d /alternate test
Shell
By default, your created users will likely have the default login shell bin/bash or bin/sh, which will be defined in /etc/default/useradd.
You can override this default with the -s option:
useradd -s usr/bin/zsh test
Putting it all together
To construct the whole command, you put the options in one after another - the order does not matter - and end with the username you wish to create.
So creating a user with a home directory and a customized shell would look like this:
useradd -m -s /usr/bin/zsh user
And then you would add a password for the user: passwd user
Read the Fine Manual
Now that you've seen the basics of what this tool can do, hopefully the man page is a little more navigable.
man useradd will show you how to add things like expiry dates on the account, assign groups, and so on.