Install lightweight Active Directory on Windows 7 for Development purposes without domain

This has been a fun topic of discussion on Server Fault. There appear to be varying "religious views" on the topic.

I agree with Microsoft's recommendation: Use a sub-domain of the company's already-registered Internet domain name.

So, if you own foo.com, use ad.foo.com or some such.

The most vile thing, as I see it, is using the registered Internet domain name, verbatim, for the Active Directory domain name. This causes you to be forced to manually copy records from the Internet DNS (like www) into the Active Directory DNS zone to allow "external" names to resolve. I've seen utterly silly things like IIS installed on every DC in an organization running a web site that does a redirect such that someone entering foo.com into their browser would be redirected to www.foo.com by these IIS installations. Utter silliness!

Using the Internet domain name gains you no advantages, but creates "make work" every time you change the IP addresses that external host names refer to. (Try using geographically load-balanced DNS for the external hosts and integrating that with such a "split DNS" situation, too! Gee-- that would be fun...)

Using such a subdomain has no effect on things like Exchange email delivery or User Principal Name (UPN) suffixes, BTW. (I often see those both cited as excuses for using the Internet domain name as the AD domain name.)

I also see the excuse "lots of big companies do it". Large companies can make boneheaded decisions as easily (if not moreso) than small companies. I don't buy that just because a large company makes a bad decision that somehow causes it to be a good decision.

I bumped into this (old) question while looking for something else, but I will add an answer for anyone that ends up here actually looking for an answer...

An option you can use (assuming you have a least a 2008 level AD domain) is to apply a password policy with your required "lighter" settings specifically against the server(s) you have hosting ADLDS. While 2003 and below had only domain-wide password policy settings, 2008 and up can support fine-grained password policies configured against certain areas of the domain.