reading this...

example, the situation where a user needs to change his password. To
do this, the user needs to write his new password to the /etc/shadow file. This file,
however, is not writeable for users who do not have root permissions.

SUID permission offers a solution for this problem. On the /usr/bin/passwd
utility, this permission is applied by default. That makes that when changing his
password, the user temporarily has root permissions, which allows him to write to
the /etc/shadow file.

does this not make it possible for anybody to write any password to /etc/shadow...i men isnt it a security compromise for convenience?

then further read this...

The SUID permission may look useful (and it is in some cases), but at the same
time, it is potentially dangerous. If applied wrongly, you may give away root permissions
by accident. I therefore recommend using it with greatest care only. Most
administrators will never have to use it; you’ll only see it on some files where the
operating system needs to set it as a default.

so is it advisable to turn off this SUID permission for specific utilities?
would an admin typically write a security script to change certain default security settings?

was just curious...

Moved: This thread is more suitable in Security and has been moved accordingly to help your thread/question get the exposure it deserves.

Only if the person who wrote /usr/bin/passwd effed up.

It means your Trusted computing base becomes bigger, but what is the alternative? (that's not a rhetorical question, there may well be reasonable alternatives)

Also, the utility works in the way that it does even though sometimes the system isn't using "shadow files."

The most important thing is to make sure that you know which files have the suid bit set, and that none of those program-files are writable.