When you password protect a web page using Internet Service Manager, you have the option of choosing either Basic authentication or NT Challenge and Response (aka: Integrated Windows authentication). The difference in the two methods is in the way the username and passwords are transmitted over the Internet. NT Challenge and Response encrypts the password so malicious snoopers can not intercept and use the information. Basic authentication sends the password as plain text. While it would be great to use NT Challenge and Response for all secured web pages, the only web browsers that currently support this protocol are Internet Explorer 3 and higher. If you might have users with other web browsers, your only choice is Basic authentication.
If you would like to have a secure website take advantage of using encrypted usernames and passwords but still want to be compatible with Netscape browsers, you can use Basic authentication over SSL. Using Secure Sockets will encrypt the user name and password but at the same time will still let Netscape browsers use your site, the best of both worlds.
Thanks to Eric Rosenblum for reminding us about Basic authentication over SSL.