OK, looks like a lot of confusion.
THE WRISTBANDS: They seem to be a silicone type band like someone said, a bit like the yellow livestrong ones. Each has an unique chip that identifies the wearer/owner as an account on the system. What that account does depends on what you have paid for (room, meals, tickets, more etc).
There has been RFID tech floating around theme parks for a few years. In the UK at Alton Towers, I experienced having a wristband which identified when I was on a ride and would video me (or whoever was wearing the band) so at the end of my day I could buy a DVD with stock video of all the rides with my specific ride edited into it.
This is just the start apparently. There are potential identity issues as whoever owns the tech can potentially "see" where each wristband is located etc, but swings and roundabouts on that one. In exchange for Disney knowing where and when you are, there could be extra magic. Kinda like ET knowing your name at the end of the ride at USF, the system COULD have Jack Sparrow mention your name but without having to tell anyone your name as it is already in the system, in a meet and greet, maybe one of the voice characters would refer to you by name without asking or if it is on the system, your favorite colour, town etc.
The pin thing is security in exactly the way a PIN or signature is used on charge or credit cards. (UK went chip and pin with charge and credit a few years ago. Dont think it has happened in USA YET!)