I am having difficulty understanding how a salt which is appended to a hash helps improve the security when a database of passwords or other important information is compromised.
If the salt is, for example, "hello", and is appended to the password "password" then the salt and password are stored together, "hellopassword" and hashed to produce:
94e66f94517d606d5ad6d9191b980408952f2ed2 (sha1)
with the salt then appended:
hello$94e66f94517d606d5ad6d9191b980408952f2ed2
How is this more secure? The attacker knows the salt so can now compute the passwords with little extra difficulty... right? Or am I fundamentally misunderstanding something?