Sites in Active Directory represent the physical structure, or topology, of your network. Active Directory uses topology information, stored as site and site link objects in the directory, to build the most efficient replication topology. You use Active Directory Sites and Services to define sites and site links. A site is a set of well-connected subnets. Sites differ from domains; sites represent the physical structure of your network, while domains represent the logical structure of your organization.
Read More: http://technet.microsoft.com/en-us/library/cc782048%28WS.10%29.aspx
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Best regards
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