Password Propagation Service is a component of Directory Sync that allows password synchronization in environments without RC4 Encryption. Unlike the Legacy Password Monitor Service, which requires RC4 Encryption, Password Propagation Service simply copies the password from the source to the target.
When a password changes in the source, the password filter installed on every domain controller in the source environment will capture the password and use the Password Propagation Service to set the password in the target using LDAPS security.