Password Policy settings are greyed out for the local administrator in Windows Server
Windows Server Password settings
The process to change Password Policy
When we tried to change a password from complexity to normal. That option was showing Grayed. We dig the issue found the following process to resolve this issue.
Step to Change Password Policy of Windows Server
Go to RUN type gpmc.msc (Security policy management) press enter
Next, Go to <Group Policy Objects> and select <Default Domain Policy>
Delegation —> Add Administrators account who will get default update/delete permission.
Screenshot available at bottom of the article
Go back and right click on Default domain policy option– click the edit button
Go to Computer configurations –> Policies — > Windows Settings -> Security settings – > account policies – > password policy -(click enable/disable). It will work now for administrators account which you had already added/delegated permissions.
Update the Policy in Windows Server
In windows server, if you make any server level change you just need to run gpupdate/force command. This command will quickly update the impact of changes.
So finally, go to run type gpupdate /force
In Windows Server 2012
Follow Steps which we had already tested in Windows Server 2012 R2
Step 1
Go through gpmc.msc (Security policy management)
Select Your domain –> Right click –> Click on Edit
You will get Group Policy Management Editor Screen.
Step 2
Group Policy Management Editor
Computer Configuration -> Windows Settings -> Security Settings -> Account Policies -> Password Policy

Conclusion
Windows server is more secured and advanced. It is not a simple client users operating systems. Ensure that you have basic knowledge of Windows Servers.