In laymans terms, its a central Database for Users, Computers, Passwords, and other object information Based on LDAP.
Active Directory is the core of a Windows 2000/2003 Domain/Forest.
In order to create a Domain/Forest active directory must be installed and it is dependent on DNS "Domain Name System"
When you first install active directory for the first time, you are creating a Forest and a domain in the forest (test.com), this forest can comaint multiple domains.
The Server that you used to create this forest now has the most important active directpry roles assigned to it.
The FSMO roles ( Flexible Single Master of Operation )
There are 5 Roles within FSMO
Sometimes remembered as "DRIPS"
(D)omain Naming Master = 1 Per Forest
(R)ID Master (Relative ID Master) = 1 Per Domain
(I)nfrastructure Master = 1 Per Domain
(P)DC Emulator = 1 Per Domain
(S)chema Master = 1 Per Forest
"Global Catalogue is another term to be aware of this should not be enabled on teh Infrastructure master, The Global Catalogue contains a fulll RW copy of the Database and partial replica of the attributes and objects from other domains , The GC is responsible for Logons and Lookups.
These roles can be Transfered or Seized between other AD server in the domain/Forest, howvere there are special rules for the DRS roles.
I wont go into to much details about the roles as its a vast subject, i will however at request.
Active Directory Database is stored in C:/Windows/NTDS/ntds.dit and is capable of growing to 16 Terrabytes, providing you had the amount of space
NTDSUTIL one of the most important tools for Active Directory.