What is anonymous authentication and what are the risks involved in enabling it?

Enabling anonymous authentication for earlier applications
Anonymous authentication allows users and network clients to be authenticated (but not necessarily authorized to access network resources) without providing any credentials. Unlike earlier Windows operating systems, in Windows Server 2003, anonymous users are not considered to be members of the Everyone group and therefore will not be authorized to use any network resources. However, there are some scenarios in which anonymous access needs to be granted to provide compatibility with systems prior to Windows 2000. Situations in which this access might be necessary include:
· Remote Access Server (RAS) servers on Windows NT 4.0 use anonymous access to determine dial-in permissions.
· Windows NT 4.0 might use anonymous access to enumerate shares or gather information from domain controllers.
· Anonymous access might be used to enumerate shares and users in a one-way cross-forest trust.
· Earlier operating systems might use anonymous access to change passwords in Active Directory. This is accomplished through the Pre–Windows 2000–compatible access group.
If you have earlier systems in your Windows Server 2003 domain, you will need to determine which resources need anonymous access. You can then enable anonymous access by performing one of the following tasks:
· Add the Anonymous Logon security principal to the ACL that needs access. This is the preferred method for enabling anonymous access to resources because it is the most granular.
· Enable the Network Access: Share That Can Be Accessed Anonymously security policy setting. This security policy setting contains a list of shares that can be accessed and is useful for enabling anonymous access to a specific share on multiple computers.
· Enable the Network Access: Let Everyone Permissions Apply To Anonymous Users security policy setting. This setting causes unauthenticated users to be considered members of the Everyone group, which might authorize users to access network resources without being authenticated as valid users. This setting should only be enabled when absolutely necessary, because it creates a significant, exploitable vulnerability.
Caution
Apply the Anonymous Logon, Network Access: Share That Can Be Accessed Anonymously, Network Access: Let Everyone Permissions Apply To Anonymous Users settings only to the OU or server that needs them. Enabling these settings at the domain level will decrease network security.