-quote-

"The benefits of using smart cards include the following:

*Because private keys are stored on the tamper-resistant smart card rather than on a less secure medium such as the user's hard disk, smart cards provide stronger security for user authentication and nonrepudiation.

*Because cryptographic operations are isolated from the operating system, smart cards are not susceptible to attacks on the operating system (such as buffer overflow attacks and memory dump attacks,which might reveal private keys or other cryptographic secrets).

*Because logon credentials accompany the user, you can issue a single smart card to each network user to provide a single set of logon credentials for logging on to local and remote networks, which can reduce the cost of administering separate user accounts for logging on to a network and logging on remotely.

In addition, logging on with a smart card provides much stronger security than other types of network logon processes that depend on traditional passwords. Furthermore, because the administrative support that is required to manage user passwords is a significant cost for most large organizations, you can deploy smart cards to reduce the cost of supporting users who forget their passwords or let their passwords expire. Smart cards use personal identification numbers (PINs) rather than passwords. The smart card is protected from misuse by the PIN, which is known only to the smart card's owner. To use the smart card, the user inserts the card in a smart card reader that is attached to a computer and, when prompted, enters the PIN. The smart card can be used only by someone who possesses the smart card and knows the PIN."

-end of quote-
Source(s):
http://technet.microsoft.com/en-us/library/cc962052.aspx


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