Shadow passwords are an enhancement to login security on Linux/Unix based systems. Traditionally, passwords are kept in encrypted form in a world-readable table (/etc/passwd). Although this scheme is reasonably secure, it is still subject to break-in attempts, such as the "dictionary attack".
To reduce the vulnerability of a world-readable password file, many newer Unix systems utilize shadow password files. "Shadow" password file holds the password hashes separate from the other data in the world-readable passwd file. For local files, this is usually /etc/shadow on Linux and Unix systems, or /etc/master.passwd on BSD systems; each is readable only by root.