By default password policy from Active Directory domain will impact ADLDS and users created in ADLDS instance. To prevent domain policies from enforcing password restrictions and rules on ADLDS users one simple setting has to be adjusted:

• ADAMDisablePasswordPolicies

Here is how it looks on computer which has ADLDS instance installed on port 50389:

C:\Windows\ADAM>ntdsutil
ntdsutil: Configurable Settings
configurable setting: Connections
server connections: connect to server localhost:50389
Binding to localhost:50389 ...
Connected to localhost:50389 using credentials of locally logged on user.
server connections: q
configurable setting: set ADAMDisablePasswordPolicies to 1
configurable setting: Commit Changes
configurable setting: q
ntdsutil: q
C:\Windows\ADAM>