After you've turned on two-step verification, some apps (like the mail apps on some phones) or devices (like an Xbox 360 or Windows Phone 8) will show an incorrect password error because they can't prompt you to enter a security code when you try to sign in. The solution to this problem is to create app passwords to use in place of your regular password, but only for these apps that don't support two-step verification. App passwords are long, randomly generated passwords that you only have to provide once.
If you don't use two-step verification, then you can't create app passwords. For help with your Microsoft account password, see When you can't sign in to your Microsoft account.
The steps for generating a new app password are always the same. Repeat these steps to get a different password for every app or device that needs an app password:
Go to the Security basics page and sign in to your Microsoft account.
Select more security options.
Under App passwords, select Create a new app password. A new app password is generated and appears on your screen.
Enter this app password where you would enter your normal password.
The way you enter an app password can be slightly different depending on the app or device you're trying to sign in to. The most common ones are listed here.