Section 4.5: Forest Functional Levels
The default forest level in Windows Server 2003 is called Windows 2000 forest functional level. This forest functional level does not does not support all the new capabilities that Windows Server 2003 offers. These new capabilities include: transitive forest trusts between forests that are at the Windows Server 2003 forest functional level; more flexible group membership replication; improved inter-site routing, which allows Windows Server 2003-based forests to support up to 5000 sites; and more flexible Active Directory schema management. For your forest to support all of those abilities, you must raise the forest from its default level to the Windows Server 2003 forest functional level. Before you can raise the forest functional level to the Windows Server 2003 forest functional level, every domain controllers in all the domains are upgraded to Windows Server 2003. However, the domain functional level does not need to be raised to the Windows Server 2003 domain functional level as Windows Server 2003 raises the domain to the Windows Server 2003 domain functional level when you raise the forest functional level to the Windows Server 2003 forest functional level. You can use the Active Directory Domains and Trusts console in Administrative Tools to raise a forest's functional level.