Your Keystore/JSON file holds an encrypted version of your private key, which is simply your private key encoded into a cool, secret string of characters. Take, for example, the word ‘apple’. If you encrypted this word with a 4-character difference down the alphabet, it would look something like ‘dssoh’. At face value, you’d have no idea what ‘dssoh’ meant. However, if you gave someone this word and told them the way you encrypted it, they could then decode it back to the world ‘apple’! This is a very simplified version of how encryption works, but it gets the point across.

When you enter your password upon generation of your wallet, it takes your password and uses it to encrypt your Private Key into a Keystore/JSON file. The result is a file that looks a lot like gibberish if you open it, (which there is no reason to do, do not open your JSON file!). This file simply holds your encrypted private key within it, which is why you have to use your chosen password to unlock your wallet via this method. You cannot change your password for an existing Keystore/JSON file.

Keystore/JSON files are not a recommended way of accessing MyEtherWallet (MEW), because software methods of access should not be used in an online environment. If you think that your Keystore/JSON file password was compromised, or you are looking for a more secure method of access, we recommend creating a new mobile or browser wallet with MEW and transferring your assets from the old wallet. Sее the following article for assistance: How to create an Ethereum wallet with MEW