Digest authentication is a web authentication method that enhances security by transmitting hashed credentials instead of plain text passwords. When a user attempts to access a protected resource, the server sends a unique challenge (nonce). The client responds by hashing the username, password, and the nonce using a cryptographic hash function (typically MD5), then sends this hash to the server. The server performs the same hash calculation and compares the result to authenticate the user. This process helps protect credentials from interception during transmission, reducing the risk of replay attacks and eavesdropping. However, digest authentication is less commonly used today due to stronger alternatives like HTTPS and OAuth.