User rights fall into two general categories: logon rights and privileges. Logon rights control who is authorized to log on to a computer and how they can log on. Privileges control access to system resources, and they can override the permissions that are set on a particular object on the computer.
The special account LocalSystem has built-in capabilities that correspond to almost all privileges and logon rights. Processes that are running as part of the operating system are associated with this account, and they require a complete set of user rights. The system services that are supplied with Microsoft® Windows® 2000 are configured automatically to run as LocalSystem. Although you can configure other services to also run under this account, it is recommended that you do so with care.