Honestly, I'm surprised to hear that anyone has FOUND the item without being told about it, lol. It's pretty hidden, so you're the first person who's brought it up to me like this. Anyways, the Password Menu is basically just an item used for silliness/memes/inside jokes, and has no real gameplay purpose.
The usable passwords as of Transportal 0.5.2 are:
"LilySauce", "password", "trans", "Transportal Eggs" , "vending machine", "skirt go spinny", "hydration check", "pride", "healing", and "penis".
Some aliases for the same effects are "1234" or "Password", "transgender", "Transportal eggs", "hydration" or "water", "flag", and "heal" or "help". The button that's labeled "remove excess silliness" should remove any effects the passwords themselves have caused, but it's probably still wise to save before messing around with the item. :)
Thanks for playing! ♥