Disable Display of Letters on Password (iOS)
The reason why you can't find the setting anywhere, is because such setting doesn't exist in iOS. I am not familiar with the Jailbreaking "world" in a sense where I haven't installed software from Cydia and such, but you can certainly try to find an app that does that. 

Please notice I said: "try", because it might not even be possible. 

On the other hand, the only reason for that is to make sure you've pressed the right key… I never liked it either but oh well.