This is all explained in the documentation and help text provided in the admin screens of the module.
Drupal supports multiple login sources. When a user logs in an entry for the type of login used for the person is stored in
user_auth as an example.
By default LDAP does not store for example the AD password of the user within Drupal. It stores a dummy password and passes login info to LDAP from the login form upon a login attempt.
If you configure LDAP to
sync drupal account information to and from Drupal then Drupal may store the password your LDAP accounts -- but this depends on how you've configured your LDAP service, and how you want the drupal ldap module to interact with it.