A Microsoft Windows Domain allows central management and control of usernames, access control, security policies, etc. One (or more) server is configured as an Active Directory server for a Windows Domain. The Windows Domain Name can be the same name as the internet domain name, but could also be different.
All desktop and laptop computers can be configured to be a part of the Windows domain if they are running the Pro (or Ultimate or Enterprise) versions of Windows.
Active Directory can be used to manage additional resources (printers, for example) and as the authentication server for VPN logins.