openssh ssh2 authentication methods

From: Jack C (casheljp@slu.edu)
Date: 01/28/02 

From: casheljp@slu.edu (Jack C)
Date: 28 Jan 2002 14:36:57 -0800

Hi,
I'm trying to decipher the portion of my openssh-2.9p2-7 manpage shown
below:

 SSH protocol version 2

     When a user connects using the protocol version 2 different
authentica­
     tion methods are available. Using the default values for
     PreferredAuthentications, the client will try to authenticate
first using
     the public key method; if this method fails password
authentication is
     attempted, and finally if this method fails keyboard-interactive
authen­
     tication is attempted. If this method fails password
authentication is
     tried.

I read this as:
        1. try public-key authentication method
        2. else, try password authentication
        3. else, try keyboard-interactive authentication
        4. else, try password authentication

Here are my questions:
1. Why is password athentication seemingly attempted twice?
2. What is "keyboard-interactive authentication?"
3. Where are the values for PreferredAuthentications specified? How
can they be modified?

Thanks,
Jack