What is Application Domain?

The primary purpose of the AppDomain is to isolate an application from other applications. Win32 processes provide isolation by having distinct memory address spaces. This is effective, but it is expensive and doesn't scale well. The .NET runtime enforces AppDomain isolation by keeping control over the use of memory - all memory in the AppDomain is managed by the .NET runtime, so the runtime can ensure that AppDomains do not access each other's memory.
Objects in different application domains communicate either by transporting copies of objects across application domain boundaries, or by using a proxy to exchange messages.
MarshalByRefObject is the base class for objects that communicate across application domain boundaries by exchanging messages using a proxy. Objects that do not inherit from MarshalByRefObject are implicitly marshal by value. When a remote application references a marshal by value object, a copy of the object is passed across application domain boundaries.
How does an AppDomain get created?
AppDomains are usually created by hosts. Examples of hosts are the Windows Shell, ASP.NET and IE. When you run a .NET application from the command-line, the host is the Shell. The Shell creates a new AppDomain for every application.
AppDomains can also be explicitly created by .NET applications. Here is a C# sample which creates an AppDomain, creates an instance of an object inside it, and then executes one of the object's methods. Note that you must name the executable 'appdomaintest.exe' for this code to work as-is.
using System;
using System.Runtime.Remoting;

public class CAppDomainInfo : MarshalByRefObject
{
public string GetAppDomainInfo()
{
return "AppDomain = " + AppDomain.CurrentDomain.FriendlyName;
}
}
public class App
{
public static int Main()
{
AppDomain ad = AppDomain.CreateDomain( "Andy's new domain", null, null );
ObjectHandle oh = ad.CreateInstance( "appdomaintest", "CAppDomainInfo" );
CAppDomainInfo adInfo = (CAppDomainInfo)(oh.Unwrap());
string info = adInfo.GetAppDomainInfo();
Console.WriteLine( "AppDomain info: " + info );
return 0;
}
}