Weak password detection

I ran a Wordfence scan and it warned me that some users have weak passwords. Since the passwords are encrypted, how can Wordfence determine what is and isn’t a weak password without knowing the unencrypted password? Does it simply try obvious passwords like “1234”, “qwerty” and “password” to see if encrypting those match encrypted passwords in the database?

https://ww.wp.xz.cn/plugins/wordfence/