What is Active Directory?

Active Directory are registries and databases that provide directory-type facility for applications and users, but not one is interconnected, share-centric, or distributed in any way.

ActiveDirectory is a universal distributed information storehouse through which all network objects, such as application configurations, services, computers, users, and processes, can be accessed, in a consistent manner, over the full expanse of a network or inter-network.

This is made possible by the logical structure of the directory. Before you start scratching your head, you should understand that without Active Directory, you cannot log in to a Windows Server 2003 domain, period.