In this function y initially has no value, but a call to foo() gives no error. Why?

[ndc85430]

You don't necessarily need the nested function for that; you can use partial application with partial from the functools module. Have create_password take both parameters, characters and length:

def create_password(characters, length):
  # Code as above

partial allows you to freeze the arguments of a function, returning a function with a lower arity:

from functools import partial

alpha_password = partial(create_password, characters='abcdef')
symbol_password = partial(create_password, characters='!@#$%')

Both alpha_password and symbol_password are functions that just take the length, as in your example.