The primary purpose of application domain is to isolate an application from other application. Win32 process provides isolation but in distinct memory address spaces. This is effective but it is expensive and doesn't scale well. The .NET runtime enforces app domain isolation by keeping control over the use of memory.
All memory in the app domain is managed by the .net runtime so the runtime can ensure that app domain do not access each other's memory. Objects in different application domains communicate either by transporting copies of objects across application domain boundries or by using a proxy to exchange messages.
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