Using multiple Active Directory accounts to connect to SQL Server
Yes, the most secure means to for authentication is Windows Authentication.  Read more about this topic and the differences here.

As for different applications having different logins, that is going to be the most secure method.  The reason behind this is because each application will most likely require a different set of permissions (I'm assuming a bit here), and instead of having one server principal with a handful of permissions to suit numerous applications, it will be more secure to have each application have a login with permissions tailored to its own needs.  It's all about the Principle of Least Privilege.