The web server can also be run from the cockpit/ws docker container. If you are running cockpit on an Atomic Host this will be the default. In this setup, cockpit establishes an SSH connection from the container to the underlying host, meaning that it is up to your SSH server to grant access. To login with a local account, sshd will need to be configured to allow password based authentication. Alternatively you can setup a Kerberos based SSO solution.
AKA, it is up to your SSH server to grant access to the container.