I only assume that Squarespace is either having support people follow a script, or is training them well enough that they don't need to follow a script. Either way, they shouldn't be asking for passwords.
Other people seem to be assuming that Squarespace is having untrained people do support, which is a much more damaging assumption.
By script, I mean standard procedures. "For this problem, do this. If it doesn't work, try this." And if you don't have that, yeah, you are going to get wildly varying quality of support.