The password itself is not stored in AD in decryptable form. As I understand it what is stored is a hash of the password and the date/time when the password was set. When a user logging on enters the password that value and the date/time when the password was last set are used to re-calculate the stored hash. if this is the same as the stored hash, the assumption is that the user entered a valid password.
Full Definition of CREDENTIAL. 1. : something that gives a title to credit or confidence; also: qualification 3a. 2. plural: testimonials or certified documents showing that a person is entitled to credit or has a right to exercise official power.
Authentication is the process of ascertaining that somebody really is who he claims to be. Authorization refers to rules that determine who is allowed to do what. E.g. Adam may be authorized to create and delete databases, while Usama is only authorised to read.