Here is a good read on how to get ADAM integration with WSS 3.0 for extranet type configuration.
The ADAM is one of the many authentication that be plugged into WSS/MOSS. This is the service provided by ASP.net provider model. For scalability i would rather be using SQL Server to store names/password. The good thing with ADAM if it can be integrated into ISA 2006 as well so it could do pre-authentication. SQL cannot be in that sense.