New Information - SQL Server 2000 SP3.
After a user has been authenticated and allowed to log in to an instance of Microsoft® SQL Server™, a separate user account is required in each database the user must access. Requiring a user account in each database prevents users from connecting to an instance of SQL Server and accessing all the databases on a server. For example, if a server contains a personnel database and a recruiting database, users who should be able to access the recruiting database but not the personnel database would have a user account created only in the recruiting database.
The user account in each database is used to apply security permissions for the objects (for example, tables, views, and stored procedures) in that database. This user account can be mapped from Microsoft Windows NT® 4.0 and Windows® 2000 user accounts, Windows NT 4.0 and Windows 2000 groups in which the user is a member, or SQL Server login accounts. If there is no account mapped directly, the user may be allowed to work in a database under the guest account, if one exists. The activities a user is allowed to perform are controlled by the permissions applied to the user account from which they gained access to a database.
Security Note When possible, use Windows Authentication. Also, avoid using the guest account; all logins without their own database permissions obtain the database permissions granted to this account. If you must use the guest account, grant it minimum permissions.
SQL Server accepts commands after a user gains access to a database. All activities a user performs in a database are communicated to SQL Server through Transact-SQL statements. When an instance of SQL Server receives a Transact-SQL statement, it ensures the user has permission to execute the statement in the database. If the user does not have permission to execute a statement or access an object used by the statement, SQL Server returns a permissions error.