As mentioned before, rainbow tables are a mechanism that can be used to reverse hash functions, revealing information that was intended to be hidden. For instance, they can take the hashed contents of a Windows password file and turn them into a password you can use. This limitation largely exists because Windows does not use the technique of ‘salting,’ which would make rainbow tables unmanageably large. Unix-based operating systems, like Mac OS X, have been salting passwords since the 1970s.
Ophcrack is a piece of free software that exploits precisely this vulnerability. As explained here, it comes as a bootable CD, which can be used to circumvent the password on a Windows XP, Vista, or 7 computer.
Among other things, this means that having a password-protected user account isn’t an adequate way to protect your data from anyone who can get their hands on your computer: from customs agents to burglars. If you have anything sensitive in there, it would be sensible to further protect it with some strong encryption.