here is the explaination from http://www.infotechguyz.com/server2008/domainfunctionallevel.html <a href=http://www.infotechguyz.com/server2008/domainfunctionallevel.html>http://www.infotechguyz.com/server2008/domainfunctionallevel.html</a> Windows Server 2003 domain functional level features - Domain rename capability Windows Server 2003 functional level supports rename of Active Directory domain. - Cross-forest transitive trusts Windows Server 2003 functional level supports transitive trusts between two or more Active Directory forests. - Universal group caching Windows Server 2003 functional level supports Universal group caching which eliminate the need for local global catalog server - Intersite topology generator (ISTG) improvements More efficient ISTG algorithm allows support for extremely large numbers of sites. - Multivalued attribute replication improvements This allows incremental membership changes. - Lingering objects (zombies) detection Windows Server 2003 ability to detect zombies, or lingering objects. - AD-integrated DNS zones in application partitions This allows storing of DNS data in AD application partition for more efficient replication.
