OpenID is a decentralized identity system. It solves the Single Sign On problem in an elegant and vendor-neutral way. You can see an explanation of how you use it in this screencast.
While a number of sites act as OpenID providers, the majority do not. Several high profile sites instead offer their own custom third party authentication services.
idproxy.net acts as a bridge between these two worlds. You can sign in to idproxy.net using your Yahoo! account, and then create one or more OpenID accounts for use elsewhere on the Web.
The site also includes a number of features designed to help guard against phishing.
This service is built and maintained by Simon Willison.
The monster graphics are borrowed from Andreas Gohr's excellent MonsterID, and are available under a Creative Commons Attribution 2.5 License.
The OpenID server is based on the JanRain Python library.
Yahoo! authentication uses the YDN BBAuth API. The sign-in graphic is borrowed from menuism.