Answers
A small, single server network generally has no domain controller, because users need to log in only to their workstation, and the server will be set up the same login name and password for them, so access to the server will be transparent.
On larger networks with multiple servers (and most Windows networks have multiple servers because Microsoft server applications don't necessarily get along with each other real well) it becomes a hassle setting up user accounts on each and every server, so one server is assigned to be the Primary Domain Controller, and one or more others will be backup domain controllers in case the primary one fails. Login accounts are entered only on the Primary Domain Controller, which propegates them to the backups.
The users log into the network through the Domain Controller and have access to all the servers according to their rights. It can be set up so they can't even access the workstation desktop if they don't have a domain account.
Active Directory is the successor to Domain Controllers, which were hard to synchronize among sites in a far flung enterprise. Windows 2000 Server can't be a Domain Controller, it must use Active Directory, which is why so many companies won't abandon their NT 4.0 servers. Active Directory is generally equivalent to a really bad case of hemorrhoids. It is geared to very large multi-site networks, but forced on even the smallest W2K network to maintain incompatibility and fight Novell Directory Services (which actually work). The AD installation Wizzard doesn't work right, either.
Windows XP Home is crippled so it can't log on to a network with a domain controller or an Active Directory network. This is so business has to spend another $50 per workstation for the exact same thing but without the cripple.
Novell NetWare used to have a near monopoly on networking in businesses too small to use SNA or DECNet. As a monopoly will, Novell became fat, happy and forgot how to compete. Microsoft pushed them out with a far inferior network (Microsoft Networking is just IBM's old PCNet with a hundered layers of patches, bandaids and bailing wire over it), superior marketing and sabotage. NetWare is still used fairly widely, especially in networks where security is a real concern.
[link|http://www.aaxnet.com|AAx]
