Domains are named using the Domain Name System (DNS). If your company is called ACME Corporation your DNS name would be (for example) acme.com. This is the top-level domain name for your company. The security domain in Active Directory maps directly to the DNS domain name.
For larger organizations you can subdivide Active Directory into child domains (based on on geography for example). If ACME Corporation has three divisions named West, Central, and East, the sub-domains can have the DNS names west.acme.com, central.acme.com, and east.acme.com.
Each domain requires a server computer. In the above scenario you would need at least four servers to host Active Directory as follows:
acme.com west.acme.com central.acme.com east.acme.com
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