Network

A domain is for large network with a centralize administration. A Domain will have at least one NT server as a domain controller. The domain controller will have all the user ids and all the computer names in the database. You can share any resources on an NT domain and easier to manage.

A workgroup is for a small network. Every user id is located locally on the computer. There is no domain controller so if a user want to access another computer resource, that user id needs to be on that computer.

It is possible to connect from one domain to another if the other domain has been trusted. It's hard to explain because I'm not teacher or instructor for Microsoft. If domain A trust domain B that users on domain B can access resourses on domain A. To trust a domain you need to go onto the domain controller and go to User Manager for Domains, Polices, Trust Relationship, and add the domain that you trust and add the domain that trusted your domain.

Hope this cleared up some issues.