Most generally, a domain is a bounded area or system in which certain types of interactions may occur. In layer two and layer three networking, the terms broadcast domain and collision domain reflect this usage.
With respect to application layer networking, the term domain has two key applications. First, domains lie at the heart of Domain Name System (DNS). Also, Microsoft has used the idea of domain has a foundation for its Active Directory (AD). The word domain has different implications in these two systems, although there is some overlap. One reason for the overlap is because Active Directory leverages DNS as one of its core technologies. However, in Active Directory, the domain idea is extended in directions not envisioned by DNS.
In DNS, domains are organized hierarchically based on their labels. Subdomains can be defined by adding lower-level labels to the left-hand side of the domain name. For example, somedomain.com can include sub1.somedomain.com, sub2.somedomain.com, and subsub.sub2.somedomain.com. Each DNS domain must be assigned at least one authoritative name server.
In Active Directory, domains are containers for all manner of network-reachable computing objects. Objects found in AD domains include computers, printers, users, and lower-level containers like organizational units (OU). AD uses DNS servers to locate objects within its system. Each AD domain must include at least one domain controller (DC). Each AD domain must also include at least one DNS name server, which if desired can also be installed as a role on the DC.