To access the LDAP service, the LDAP client first must authenticate itself to the service. That is, it must tell the LDAP server who is going to be accessing the data so that the server can decide what the client is allowed to see and do. If the client authenticates successfully to the LDAP server, then when the server subsequently receives a request from the client, it will check whether the client is allowed to perform the request. This process is called access control.
In LDAP, authentication is supplied in the "bind" operation. Ldapv3 supports three types of authentication: anonymous, simple and SASL authentication. A client that sends a LDAP request without doing a "bind" is treated as an anonymous client. Simple authentication consists of sending the LDAP server the fully qualified DN of the client (user) and the client's clear-text password. This mechanism has security problems because the password can be read from the network. To avoid exposing the password in this way, you can use the simple authentication mechanism within an encrypted channel (such as SSL), provided that this is supported by the LDAP server.
Finally, SASL is the Simple Authentication and Security Layer (RFC 2222). It specifies a challenge-response protocol in which data is exchanged between the client and the server for the purposes of authentication and establishment of a security layer on which to carry out subsequent communication. By using SASL, LDAP can support any type of authentication agreed upon by the LDAP client and server. SASL instalation and setup is far away from being a user-friendly custom task. Actually I haven't hurd of many people using OpenLDAP with SASL (specially with the simpler protocol DIGEST-MD5). Anyway, you can try this adventure downloading the Cyrus-SASL package: http://asg.web.cmu.edu/sasl/sasl-library.html. If you prefer to use SASL with Kerberos V or GSSAPI, there's a useful link at http://www.openldap.org/doc/admin/sasl.html. This link assumes you've already managed to install and configure the SASL library. The mailing lists will help you get going with this matter: http://asg.web.cmu.edu/sasl/index.html#mailinglists
Further on authenticating users to access information from your Directory Tree, your LDAP server can authenticate users from other services too (Sendmail, Login, Ftp, etc.). This is accomplished migrating specific user information to your LDAP server and using a mechanism called PAM (Pluggable Authentication Module). The authentication module for LDAP is available as a tar ball on the following address: http://www.padl.com/OSS/pam_ldap.html