Essentially, it would be a boolean of: if anything is returned

password_set = 1

if nothing returned

password_set = 0

Output from running the command you pasted:

fritz-imac$ dscl . -authonly fritz-imac ""
Authentication for node /Local/Default failed. (-14090, eDSAuthFailed)
<dscl_cmd> DS Error: -14090 (eDSAuthFailed)
fritz-imac$

vs.

nopassword-test$ dscl . -authonly nopassword-test ""
nopassword-test$