User username from 127.0.0.1 not allowed because not listed in AllowUsers

What's going on?  The user was created properly, it has been defined as having a shell entry and the entry for /etc/passwd and /etc/shadow is set just fine.

This is a new and very smart/secure feature of SSHD.  It is simple and yet effective, but also very annoying if you didn't know about it being implemented and that hand editing of /etc/ssh/sshd_config is required to allow a newly added SSH user access.

vi /etc/ssh/sshd_config

Search for "AllowUsers"

You'll probably see this:

AllowUsers root

Just add your user underneath:

Eg. AllowUsers YourUserName

That's all there is to it.