It's a difference between:
CREATE USER 'bill'@'%' IDENTIFIED BY 'passpass';
and
CREATE USER 'bill'@'localhost' IDENTIFIED BY 'passpass';
Check it:
mysql> select user,host from mysql.user;
+---------------+----------------------------+
| user | host |
+---------------+----------------------------+
| bill | % | <=== created by first
| root | 127.0.0.1 |
| root | ::1 |
| root | localhost |
| bill | localhost | <=== created by second
+---------------+----------------------------+
The command
mysql -u bill -p
access implicit to 'bill'@'localhost' and NOT to 'bill'@'%'.
There are no permissions for 'bill'@'localhost'
you get the error:
ERROR 1045 (28000): Access denied for user 'bill'@'localhost' (using password: YES)
solving the problem:
CREATE USER 'bill'@'localhost' IDENTIFIED BY 'passpass';
grant all privileges on . to 'bill'@'localhost' with grant option;