By default, AD LDS supports and enforces the password policy settings
and account lockout settings that are provided by Windows Server 2008,
including the following:
Minimum age
Maximum age
Complexity
History
Too many failed logon attempts
Disabling and enabling of accounts
If the server on which AD LDS is running belongs to a workgroup, the
server's local password policy settings and account lockout settings
are implemented. If the server on which AD LDS is running belongs to a
domain, the password policy settings and account lockout settings from
Active Directory Domain Services (AD DS) are implemented
.
From this site - technet.microsoft.com/en-us/library/cc731012(v=ws.10).aspx
