Smartcards and proximity cards have been around for many years.
Proximity or magnetic cards (mag cards) traditionally have been used more for physical access controls rather than for the authentication of people. Smartcards have been used for everything from mobile phone SIMs, to satellite decoders.
Smartcards are now becoming quite popular for use in authentication technologies providing the something a user has factor of authentication. So while it technically is possible to steal or copy a user's smartcard it adds another level of complexity to the equation for those with malicious intentions.
Smartcards, like mag cards, can also be printed on and used as company and photo IDs for security checkpoints and visual user identification.
Smartcards can also be used for storing biometric information or digital signatures/certificates and encryption/VPN codes.
The benefits of storing these types of information on a smartcard are fairly significant; firstly it removes the need for that information to be stored all together in a single database. It also removes the need to send that information from a server to a client where it may potentially be intercepted by a man-in-the middle attack; this is particularly relevant in the case of encryption handshaking.
Many vendors are now integrating smartcard readers into some of their devices such as HP and Acer in their notebook range. In a review we performed last year Sun Microsystems had a thin client terminal (Sun Ray 150) which used smartcard technology not only for authentication but in an innovative way by switching the entire user environment from one terminal to another terminal simply by unplugging the card and plugging it into another terminal.