Most people in the Netherlands think it is common to see two people on a single bike, and when kids are involved even three or more.
The back rack has to be the sturdy kind but many or even most bikes in the city have that kind of strong rack.
Dutch law used to have rules for how big the passenger may be in comparison to the rider, but that is seen as for kids only, so it is the bigger (and likely older) kid doing the cycling and the smaller one being passenger.
Adults are seen as able to judge whether the weight distribution is getting dagerous and should know when not to offer/take a ride on the rack.
Current rules seem to require a formal seat and rests for the feet, but I have not found official rules yet.
Even a search on internet does not give clear information, this blog post from A View from the Cycle Path has a few lines that seem to proof it is allowed in the Netherlands, more in the negative that it is not allowed on other countries.
This cycle information in the Nethelands page shows that kids under the age of 8 can only be transported when in a safe seat.
- Fietsers mogen alleen kinderen onder de 8 jaar vervoeren als zij op veilige zitplaats zitten.
I met two girls both traveling Europe, one from the USA and the other from Canada, the USA girl had been in Amsterdam and told her new friend, who was on her way to Amsterdam, that she had to accept a ride on the back of a bike, once. (And not more often as it is not the most comfortable transport.)
I have had my one time as kid.
As a foot note, it is so common to see people carried on the back of a bike in Amsterdam that visitors, either short term or long term, will often show it in their photo series, like in this blog entry in Amsterdamize
This is a two minute video which explains (and tries to teach) how to hop on the back of a bike.