Windows Server 2003 Question:

Answer #1
Group policies are used by administrators to configure and control user environment settings. Group Policy Objects (GPOs) are used to configure group policies which are applied to sites, domains, and organizational units (OUs). Group policy may be blocked or set so it cannot be overridden. The default is for subobjects to inherit the policy of their parents. There is a maximum of 1000 applicable group policies.

Answer #2
Group policies are linked to domains, organizational units, or sites in Active Directory. A policy must be linked to a container object in Active Directory to be effective. They are stored in any domain for storage but can be linked to other domains to make them effective there also. The policy must be linked to the container (site, domain, or OU) that it is stored in to be effective in that container. One policy object can be linked to several containers. Several policy objects can be linked to one container.