Why do I need to enter Passcode when signing in iCloud on iPhone?

Sometimes, when you are trying to sign in to iCloud on your iPhone, you will be prompted to enter your Passcode of your iPhone, Because Apple wants to make sure that the person who is signing in to iCloud has the permission from the owner of the iPhone.

Here is an example scenario:

1. Your friend borrows your iPhone for a few minutes to make a call.

2. Your friend signs out your iCloud account on your phone first.

3. Your friend then tries to sign in to his iCloud account on your phone. He sees the "Enter Passcode" screen:

Enter Passcode

Your passcode will be used to confirm your identify 
when signing in to iCloud on a new device.

4. If Apple is not asking the Passcode your iPhone (the one you use to unlock your iPhone), he can finish sign in to his iCloud on your iPhone and turn on the photo uploading service.

5. Your private photos will be quietly uploaded to your friend's iCloud storage. And you will not know about it.

So asking your iPhone unlock passcode when signing to iCloud on your iPhone is needed to protect your data on your iPhone.

The picture below shows you "Enter Passcode" screen during the iCloud signing in process on your iPhone:

⇒ Wi-Fi Required for iCloud on iPhone

⇐ Sign In to iCloud on iPhone

⇑ Using iCloud on iPhone

⇑⇑ Apple iCloud - Frequently Asked Questions