From Seo Wiki - Search Engine Optimization and Programming Languages
.htpasswd is used to create and update the flat-files used to store usernames and password for basic authentication of Apache HTTP Server. The file name starts with a dot, because most Unix-like operating systems consider any file that begins with dot to be hidden.
Resources available from the Apache HTTP server can be restricted to just the users listed in the files created by htpasswd.
In terms of security that is most important part of application.
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