When setting document security, (In Acrobat 7, select File > Document Properties > Security,) the first choice facing document distributors is that of Security Method, which denotes how authorized users are identified:
No Security leaves the document unsecured, so there is no authentication required.
Password Security allows the document to be opened or manipulated by anyone who knows the required passwords.
Certificate Security identifies authorized users by the certificates they hold. When the document is secured, user certificates are assigned to a list identifying who's authorized to access the document.
Policy Server is a server-based security and authentication solution from Adobe. It counts real-time authentication among its many features.
Encryption and compatibility
Acrobat is fully backward compatible, meaning that not only can it read older documents, but it's also possible to create documents in Acrobat 7 that can be viewed using the venerable Acrobat Exchange 3. Since document security has advanced a long way since that product was current, cutting-edge security measures are not compatible with older versions of Acrobat. As a result, the choice of encryption level is an important one that underlines the principle of "usage versus security" -- greater security results in narrower compatibility.
OK, so you want to stamp your document. Maybe you need to give reviewers some advice about the document's status or sensitivity. This tip from author Ted Padova demonstrates how to add stamps with the Stamp Tool along with related comments.