Security has two basic components: authentication and permissions. Authentication deals with verifying that the entity logging onto the system is who they claim to be and permissions associate various allowable actions with that entity.
Authentication can get its credentials from a number of sources. In some cases a login and password must be provided. Two factor authentication systems require something from a physical token (common on on-line banking systems) or possibly biometric information such as a fingerprint (sometimes used on laptop computers) in addition to the password.
For convenience, some authentication systems such as Kerberos manage authentication centrally through an authentication server that is trusted by other machines. The authentication server has a list of machines or services that can request login tokens, along with credentials that those machines can use to demonstrate the authenticity of requests for session information.
On login to the authentication server, an ephemeral 'session' token is issued that can be presented for authentication on other systems through a secure protocol. The authentication server will then supply details of the login credentials associated with the token. The authentication protocol also has a secure mechanism by which the servers requesting session credentials can validate themselves to the authentication server, which prevents the session token from being leaked by spoofing an authentication request.
The most widely used implementation of Kerberos is Microsoft's Active Directory.