What is the situation that "pam_localuser.so" fails and "pam_succeed_if.so uid < 500 quiet" succeeds in /etc/pam.d/password-auth ?

Issue

• Here is a default password-auth configuration.

[root@rhel6 ~]# grep ^account /etc/pam.d/password-auth
account     required      pam_unix.so
account     sufficient    pam_localuser.so
account     sufficient    pam_succeed_if.so uid < 500 quiet
account     required      pam_permit.so

• What is the situation that "pam_localuser.so" fails and "pam_succeed_if.so uid < 500 quiet" succeeds?