Network Time Protocol (NTP) provides a time server that all clients on a network can query to keep their system clocks in sync. It is critical to keep each computer on a network referencing the same time, for several reasons.
Several subsystems rely on having correct time, such as Kerberos, which uses synchronized time to prevent replay attacks and synchronize authentication services.
A standard time reference also helps preserve the sanity of system administrators with the integrity of all timestamps ensured (including those for mail headers, database transactions, and file system metadata), correlating log files and events is easier. It would be a waste of time to apply an offset to the timestamps in various files just to match up a login or other event.
NTP is a hierarchical system, disseminating Coordinated Universal Time (UTC), created by several strata of servers. Strata 0 servers, including atomic and GPS clocks, are the highest in the sequence and, therefore, the most accurate. Strata 0 servers feed strata 1 servers, which also have a high level of precision. Strata 1 servers typically include time servers run by governments and institutions of science. Strata 2 servers are any NTP servers that sync their time from a Strata 1 server. Strata 3 servers sync from Strata 2, and so on.
NTP clients can sync to any time server that they are authorized to access. However, two rules apply: The closer the NTP server the better, to reduce latency; and all devices on a given LAN should sync to the same time source. This time source will preferably be an internal resource acting as an NTP server (such as Mac OS X).
Understanding the NTP Service
Mac OS X uses the open source ntpd software suite to provide time services. The ntpd daemon performs the actual work, sending NTP queries on UDP port 123