mysql> GRANT ALL PRIVILEGES ON *.* TO 'testuser'@'127.0.0.1' IDENTIFIED BY 'password' WITH GRANT OPTION;
Query OK, 0 rows affected (0.00 sec)

mysql> FLUSH PRIVILEGES;
Query OK, 0 rows affected (0.00 sec)

mysql> select * from mysql.user where User='testuser' \G
*************************** 1. row ***************************
                 Host: 127.0.0.1
                 User: testuser
             Password: *2470C0C06DEE42FD1618BB99005ADCA2EC9D1E19
          Select_priv: Y
          Insert_priv: Y
          Update_priv: Y
          Delete_priv: Y
          Create_priv: Y
            Drop_priv: Y
          Reload_priv: Y
        Shutdown_priv: Y
         Process_priv: Y
            File_priv: Y
           Grant_priv: Y
      References_priv: Y
           Index_priv: Y
           Alter_priv: Y
         Show_db_priv: Y
           Super_priv: Y
Create_tmp_table_priv: Y
     Lock_tables_priv: Y
         Execute_priv: Y
      Repl_slave_priv: Y
     Repl_client_priv: Y
     Create_view_priv: Y
       Show_view_priv: Y
  Create_routine_priv: Y
   Alter_routine_priv: Y
     Create_user_priv: Y
           Event_priv: Y
         Trigger_priv: Y
             ssl_type:
           ssl_cipher:
          x509_issuer:
         x509_subject:
        max_questions: 0
          max_updates: 0
      max_connections: 0
 max_user_connections: 0
1 row in set (0.00 sec)

mysql> quit
Bye
[root@db1 ~]# mysql -u testuser -ppassword -h 127.0.0.1
Welcome to the MySQL monitor.  Commands end with ; or \g.
Your MySQL connection id is 20
Server version: 5.1.61 Source distribution

Copyright (c) 2000, 2011, Oracle and/or its affiliates. All rights reserved.

Oracle is a registered trademark of Oracle Corporation and/or its
affiliates. Other names may be trademarks of their respective
owners.

Type 'help;' or '\h' for help. Type '\c' to clear the current input statement.

mysql> quit
Bye
[root@db1 ~]# mysql -u testuser -h 127.0.0.1
ERROR 1045 (28000): Access denied for user 'testuser'@'localhost' (using password: NO)
[root@db1 ~]# mysql -u testuser
Welcome to the MySQL monitor.  Commands end with ; or \g.
Your MySQL connection id is 22
Server version: 5.1.61 Source distribution

Copyright (c) 2000, 2011, Oracle and/or its affiliates. All rights reserved.

Oracle is a registered trademark of Oracle Corporation and/or its
affiliates. Other names may be trademarks of their respective
owners.

Type 'help;' or '\h' for help. Type '\c' to clear the current input statement.

mysql>