In order to change the default password length (and or complexity) on an Ubuntu 16.04 LTS install do the following:

1. open the terminal
2. go to /etc/pam.d
3. there should be a file named common_password - open it (by using sudo!)
4. find the line under the comment "# here are the per-package modules (the "Primary" block)"
5. to disable complexity, delete "obscure" (more details here) and to set password length add minlen=N (where "N" is the desired number of password characters) - in the end the line should look like this: password [success=1 default=ignore] pam_unix.so minlen=1 sha512
6. save and close the file

(All the above is valid for standard, non-modified / default installations of the latter)