What is Form Based Authentication? Form Based Authentication (FBA) provides your own authentication method using a web form. More and more companies are using FBA as a way of extending a site for non-Active Directory (AD) users.
SharePoint standard installation uses as default AD to query the Domain Controller and to check user credentials through Windows Authentication. FBA uses a custom database created separate from AD to store user credentials. Authentication using FBA is executed by a SQL DB query. When FBA is used to extend SharePoint sites, external users (non AD users) have access to SharePoint.
Why would you allow access to external users? A practical reason for extending a SharePoint site through FBA is collaboration on documents with your clients or vendors.
There are tons of blog posts about the implementation and the use of Forms Based Authentication in a SharePoint environment. Here are few of the most popular resources:
Users who authenticate with FBA do not have the same level of functionality available as users who authenticate with a Windows Authentication method. Basically the client integration features would not work:
Here is some more information on FBA shortcomings: “Expected Behavior When Client Integration is Disabled”