I believe the aim is to have email providers be able to auth your persona email instead of Mozilla, but Mozilla exists as a sort of polyfill if the provider (eg. hotmail.com, gmail.com, your-custom-domain.net) doesn't do persona yet.

Also, yes: people can still choose crummy passwords. Personally, I don't think the appeal is in better security; it's convenience of single sign-on without it being tied to a. identity or b. Facebook (or twitter or google or whatever other service that harvests my data).