php - How do I effectively use crypt()

I don't understand the documentation at php.net. It appears they are using the encrypted version of password as the salt when testing against the original encryption.

When I insert crypt with out the optional second parameter (the salt) I get different encrypted versions of the same password. Is this expected behavior?

However if I insert a second parameter of 'd4' then I get the same encrypted passwords for the same password input. Expected behavior.

Prior to insertion on signup:

$pass = crypt('$pass', 'd4'); // after this I insert $pass into the mysql table
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Testing on signin:

$pass = crypt($pass, 'd4'); // after this I test $pass against the mysql table
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PHP.net documentation:

<?php
$password = crypt('mypassword'); // let the salt be automatically generated

/* You should pass the entire results of crypt() as the salt for comparing a
   password, to avoid problems when different hashing algorithms are used. (As
   it says above, standard DES-based password hashing uses a 2-character salt,
   but MD5-based hashing uses 12.) */
if (crypt($user_input, $password) == $password) {
   echo "Password verified!";
}
?> 
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How does this work?