To make the most out of your Lumia phone, it is highly recommended to either sign in with one of your Microsoft Accounts or create a new Microsoft Account. If you already have any of the below accounts, you can use them to login when your Lumia asks for your Microsoft Account credentials. · Xbox Live · Hotmail, MSN or Outlook.com · Windows Live ID · Microsoft Account   Having a Microsoft account gives you a lot of benefits: · Download apps and games from Windows Phone Store (Microsoft Marketplace) · Automatically sync your contacts and calendar to Outlook.com · Upload, store, and share pictures, video clips and documents on OneDrive · Keep track of and lock your lost phone with Find My Phone · Get your gaming achievements on your phone, and add to them when you play games on your phone

Creating new Microsoft account is easy. You can start from here: https://signup.live.com/signup/  

To find out more about the Microsoft Account, please visit Microsoft’s web site:http://www.windowsphone.com/en-GB/how-to/wp8/start/microsoft-account