What are Fine-Grained Password Policies in Longhorn server? How does it improve existing password policy available in Windows 2003?

Fine-grained Password Policy

Windows Server 2008 provides organizations with a way to define different password and account lockout policies for different sets of users in a domain. In Windows 2000 and Windows Server 2003 Active Directory domains, only one password policy and account lockout policy could be applied to all users in the domain. These policies were specified in the Default Domain Policy for the domain. As a result, organizations that wanted different password and account lockout settings for different sets of users had to either create a password filter or deploy multiple domains. Both options are costly for different reasons.
You can use fine-grained password policies to specify multiple password policies within a single domain. You can use fine-grained password policies to apply different restrictions for password and account lockout policies to different sets of users in a domain.
For example, you can apply stricter settings to privileged accounts and less-strict settings to the accounts of other users. In other cases, you might want to apply a special password policy for accounts whose passwords are synchronized with other data sources.
Fine-grained password policies apply only to user objects (or inetOrgPerson objects if they are used instead of user objects) and global security groups. By default, only members of the Domain Admins group can set fine-grained password policies. However, you can also delegate the ability to set these policies to other users. The domain functional level must be Windows Server 2008.
Fine-grained password policies do not interfere with custom password filters that you might use in the same domain. Organizations that have deployed custom password filters to domain controllers running Windows 2000 or Windows Server 2003 can continue to use those password filters to enforce additional restrictions for passwords.