X authority allows for much finer access control than the xhost mechanism. Everytime a user logs onto an X terminal a ``magic cookie'' is generated and stored in a file in the users home directory. This ``magic cookie'' allows access to the X terminal. It is not user specific so it can be passed on to others. The ``magic cookie'' is also useful when telnetting to another computer. It can be passed to that computer and the remote computer can display its windows on the local X terminal.
There are two sensible ways to make ``magic cookies'' available to another computer. The first one is trivial. If two computers use the same file space then they will also use the same X authority file and the user has access to the X terminal from both computers. If two computers do not share the same file space the ``magic cookie'' has to be transfered manually.