Active Directory enables single sign on to access resources on the network such as desktops, shared files, printers etc. Active Directory provides advanced security for the entire network and network resources. Active Directory is more scalable and flexible for administration. Functional levels help the coexistence of Active Directory versions such as, Windows NT, Windows 2000 Server, Windows Server 2003 and Windows Server 2008. The functional level of a domain or forest controls which advanced features are available in the domain or forest. Although lowest functional levels help to coexist with legacy Active Directory, it will disable some of the new features of Active Directory. But if you are setting up a new Active Directory environment with latest version of Windows Server and AD, you can set to the highest functional level, thus all the new AD functionality will be enabled. Windows Server 2003 Domain Functional Levels: Windows 2000 mixed (Default), Windows 2000 nat...
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