Adding People To System Grey On? Is this normal?
That's not the ability to create a user. I think you misunderstand what those settings are. Those are the options you'll see when you select the "Share" feature in an app such as Photos. It's not enabling sharing directly, and nothing will happen unless and until you expressly choose an option, and then security will be the same as anything else sent through that choice, e.g. Mail or Messages.
Use the Share menu on Mac - Apple Support (AE)
Regards.