SELECT version();

grant all privileges on test.* to test@'%' identified by '123456'; 

create user test@'localhost' identified by '123456';

grant all privileges on test.* to test@'localhost';

flush privileges;

alter user test@'localhost' identified with mysql_native_password by '123456';

mysql> grant all privileges on test.* to test@'%' identified by '123456';  
ERROR 1064 (42000): You have an error in your SQL syntax; check the manual that corresponds to your MySQL server version for the right syntax to use near 'identified by '123456'' at line 1

mysql> grant all privileges on test.* to test@'%' identified by '123456';    
Query OK, 0 rows affected, 1 warning (0.08 sec)
mysql> flush privileges;

mysql> show warnings;
+---------+------+------------------------------------------------------------------------------------------------------------------------------------+
| Level   | Code | Message                                                                                                                            |
+---------+------+------------------------------------------------------------------------------------------------------------------------------------+
| Warning | 1287 | Using GRANT for creating new user is deprecated and will be removed in future release. Create new user with CREATE USER statement. |
+---------+------+------------------------------------------------------------------------------------------------------------------------------------+
1 row in set (0.00 sec)

mysql> create user test@'localhost' identified by '123456';
Query OK, 0 rows affected (0.10 sec)

mysql> grant all privileges on test.* to test@'localhost';
Query OK, 0 rows affected (0.17 sec)

mysql> flush privileges;
Query OK, 0 rows affected (0.18 sec)