The login starts a new Xsession. To connect to an XDM you will need a working X Windows setup at the other end. After a few moments a login screen should appear. In testing this happened within 30 seconds on a 14.4k modem link. XDM as a system is designed to work primarily on LANs, but as it uses Internet protocols, it will also work over long distances as well.
X windows does have some interesting security features.
There is the 'xhost' system that keeps a list of domain names allowed to connect to a display. We saw an example of this above. In addition there are various authorization schemes that work with 'magic cookies' or 'tickets'. With these schemes XDM issues the magic cookies to the remote end, where the user is at login time. Each time a connection is set up, the cookie is checked to see if it is allowed.