Mac requires password every time I wake it I have my Macbook set to require a password one hour after sleep or inactivity, but it still asks for my password even after a moment of sleep. Am I misunderstanding this setting or is there another setting I am overlooking?
You didn't say where you set the preference, or your OS X version.

System Preferences → Security &amp; Privacy → General has a setting:

In OSX 10.9 / 10.10: "Require password Immediately after sleep or screen saver begins." 
In OSX Mavericks: "Require password for sleep and screen saver", followed by the time. 

That item should be turned on and set to your preferred time.

If it already was, turn it off, quit System Preferences, then relaunch System Preferences and turn it on, then set your preferred time.