Placeholder text is the text that appears in a field before the user inputs data. Usually this text gives an example of what the user would type into the field, or lets the user know what that field is supposed to contain.  e.g. For the Email field, you might put the word 'Email', or an example email address. 

If you want to add placeholder text to the login form fields you can include the following code in your login page content:

jQuery(function() {
jQuery('#log').attr('placeholder', 'Username');
jQuery('#pwd').attr('placeholder', 'Password');

Note: the default WordPress editor restricts the <script> tag. You'll need to use the method of your choice to insert the above code into your content. Scripts n Styles is an example of a 3rd party plugin that will allow you to add the above code to a page or post.