Lower level log of USB activity than Console.app or system.log

Right click it in Console.app - Reveal in Finder :)

For completeness, it's located in /private/var/log.

No, Console won’t log any of your passwords. It only logs normal process activity like load, errors, warnings, etc.

Certain user activity that can causes a major change in the program’s behaviour will also be logged. Opening and saving documents is one such activity.

Automator logs your password because it doesn’t know you are entering your password; it only knows that keyboard input is being received. Recording actions in Automator is very literal. It records the points being clicked, not the buttons. It records the delay between two actions; it does not detect if a previous action has completed or not. Similarly, it records the buttons being pressed, not what those buttons do or even if the key presses are for a text field or a game.