SQL Authentication : 
SQL Authentication is the typical authentication used for 
various database systems, composed of a username and a 
password. Obviously, an instance of SQL Server can have 
multiple such user accounts (using SQL authentication) with 
different usernames and passwords. In shared servers where 
different users should have access to different databases, 
SQL authentication should be used. Also, when a client 
(remote computer) connects to an instance of SQL Server on 
other computer than the one on which the client is running, 
SQL Server authentication is needed. Even if you don't 
define any SQL Server user accounts, at the time of 
installation a root account - sa - is added with the 
password you provided. Just like any SQL Server account, 
this can be used to log-in localy or remotely, however if 
an application is the one that does the log in, and it 
should have access to only one database, it's strongly 
recommended that you don't use the sa account, but create a 
new one with limited access. Overall, SQL authentication is 
the main authentication method to be used while the one we 
review below - Windows Authentication - is more of a 
convenience. 
Windows Authentication : 
When you are accessing SQL Server from the same computer it 
is installed on, you shouldn't be prompted to type in an 
username and password. And you are not, if you're using 
Windows Authentication. With Windows Authentication, the 
SQL Server service already knows that someone is logged in 
into the operating system with the correct credentials, and 
it uses these credentials to allow the user into its 
databases. Of course, this works as long as the client 
resides on the same computer as the SQL Server, or as long 
as the connecting client matches the Windows credentials of 
the server. Windows Authentication is often used as a more 
convenient way to log-in into a SQL Server instance without 
typing a username and a password, however when more users 
are envolved, or remote connections are being established 
with the SQL Server, SQL authentication should be used.