Not sure if I understood your question.
The client does not do the validation, the server does.
On user connection, the Validator specified in the deploymenty xml is instanced and invoked by the server. It returns a list of what information it needs to do validation. The server then communciates this to the client… The client collects this information and returns it to the server.
The FlatFileUserValidator, which is a simple example that ships with the SDK, uses the passwd.txt file.as its validation data. This is a sever side file. You cna edit it to add users. I am pretty sure that there are comments in the file itself that explain its format.
As alluded to above, when we get the stack extension SDK out you will be able to write your own Validators that do authentication how ever you want.