AD LDS is a Lightweight Directory Access Protocol (LDAP) directory service that provides flexible support for directory-enabled applications, without the dependencies that are required for Active Directory Domain Services (AD DS). AD LDS provides much of the same functionality as AD DS, but it does not require the deployment of domains or domain controllers. In environments where AD DS exists, AD LDS can use AD DS for the authentication of Windows security principals. You can run multiple instances of AD LDS concurrently on a single computer, and have an independently managed schema for each AD LDS instance.Now I don't recommend running a production directory service based on Windows 7 but certainly for development and testing this gives you an easy way to achieve either without a server infrastructure.
I do wish that Microsoft would invest further in the management tools and GUI around ADAM. Right now, it's the red-headed step-child to Active Directory.
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