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Hashing passwords using Memory/CPU hard context (spamming memory and CPU space/cycles) to slow down brute force are useful for offline and online attack but if you think about it in terms of cost, offline attacks are more cheaper because you get to scale and do the password cracking at your own pace whereas an online attack, you may not be able to scale well and you have a limited bandwidth (unless you control a botnet or two).
When you get into a scenario where you have hacked into a database containing the hashes, it is considered an offline attack where you can take your time to scale with much comfort. Chips are getting more advanced and specialized chips containing algorithm accelerators would make brute forcing offline much more comfortable (of course it can be done online too).
Password encryption comes into play where you have downloaded the database of offline passwords and a properly implemented password encryption scheme, you have to handle an additional task at hand which is to figure out the actual hashed passwords so you can brute force. Without the actual hashed passwords, your comparison would become inaccurate and some password encryption scheme uses a master key to encrypt a per password key (KEK style) and this adds another layer of challenge since in order to re-produce the environment to brute force the encrypted password hashes, you would not only need to setup the correct encryption schemes with correct keys with the correct hashing algorithms and the database of encrypted and hashed passwords.
@Anura, WaelAttacks on passwords typically take place under two types of circumstances namely offline attacks and online attacks. Offline attacks usually take place due to access of hashed passwords (a.k.a hacked customer or login databases). The online attack is usually someone spamming a web form. 2b1af7f3a8