SQL Server supports different kinds of authentication mechanisms and protocols: the older NTLM protocol, and Kerberos. A lot of people cringe when you mention Kerberos because, well, Kerberos is hard. It’s arcane, it’s complex, and it’s hard to even describe unless you use it on the regular.
Simply put, it’s a ticketing and key system: you, a user, requests a ticket from a store, usually by authenticating to it via a username and password. If you succeed, you get a ticket that get stored within your local machine. Then, when you want to access a resource (like a SQL Server), the client re-ups with the store you got your initial ticket from (to make sure it’s still valid), and you get a “key” to access the resource. That key is then forwarded onto the resource, allowing you to access the thing you were trying to connect to. It’s way, way more complex than this, with lots of complicated terms and moving parts, so I’m doing a lot of hand-waving, but that’s the core of the system. If that kind of stuff excites you, go Google it, and I promise you’ll get more than you ever bargained for.
Kerberos is a scary beast to me, mostly because I don’t spend enough time working directly with it.