This setting controls whether local accounts can be used for remote administration via network logon (e.g., NET USE, connecting to C$, etc.). Local accounts are at high risk for credential theft when the same account and password is configured on multiple systems. Enabling this policy significantly reduces that risk.
Enabled (recommended): Applies UAC token-filtering to local accounts on network logons. Membership in powerful group such as Administrators is disabled and powerful privileges are removed from the resulting access token. This configures the LocalAccountTokenFilterPolicy registry value to 0. This is the default behavior for Windows.
Disabled: Allows local accounts to have full administrative rights when authenticating via network logon, by configuring the LocalAccountTokenFilterPolicy registry value to 1.
For more information about local accounts and credential theft, see "Mitigating Pass-the-Hash (PtH) Attacks and Other Credential Theft Techniques": http://www.microsoft.com/en-us/download/details.aspx?id=36036.
For more information about LocalAccountTokenFilterPolicy, see http://support.microsoft.com/kb/951016.