NTP is used to set and synchronize the internal clocks of network-connected systems. When properly configured, systems running the NTP daemon can be synchronized within a few milliseconds (or better), even over relatively slow WAN connections.
The NTP daemon also supports synchronization with an external time source, such as a GPS receiver. Systems directly connected to an external time source (and properly configured) are the most accurate, so they are designated stratum 1 servers. Systems synchronizing to stratum 1 servers are designated stratum 2, and so on, down to stratum 15.
The NTP software package has support for cryptographic key-based authentication, although setting this up is outside the scope of the LPI Level 1 Exams and will not be covered here.