This variable, in conjunction with A_MSSQL_APPROLE_NAME, enables use of approles. Before connecting to a database, set A_MSSQL_APPROLE_NAME to the name of a role. Then set A_MSSQL_APPROLE_PASSWD to a password for that role. By using these two variables, you set the run time to use this approle.
For more information on approles, please see the Microsoft SQL Server documentation.