Kathi Kellenberger digs into Kerberos:
2. Why is Kerberos needed for SQL Server?
When NTLM is used, the client, for example a user logged into a laptop, contacts a domain controller when requesting access to a resource in the network. This resource could be an SSRS report, for example. When using NTLM, the user proves their identity to the SSRS server. Unfortunately, the SSRS server cannot forward the credentials of the user along to the database server. The database server will deny the request, and the end user will see an error message. This is common with SSRS but will also be seen whenever resources are needed involving multiple servers.
When Kerberos is property configured, the SSRS server can pass along confirmation of the identity of the requester to the database server via the ticket. If the login of the original requester has permission to select the data, it’s returned to the SSRS server, and the report is delivered.
Even if you are not using SSRS, you can run into issues when Kerberos is not configured properly. For example, you will often see error messages when trying to connect to SQL Server using SSMS (SQL Server Management Studio) when logged into another server when SPNs are misconfigured.
Having a good understanding of Kerberos can save you configuration headaches when going between servers.