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domain controller (dc), provides 1 place that evrybody can loggin. If you have only 1 it can serve also as file and printer sharing instead of the workstations, so you have only 1 place to troubleshoot. Usually you protect it so only the domain administrator has full controll, users has only read.
If you need to setup a security policy you wll do it on the domainlevel so it will propagate to the pc’s instead on going x pc’s to setup policies.
For more info you will have to go to the website of MS, buy the dummy series on w2k, buy some books studyguides, install the server and play with (you can download or order the evaluation cd’s), go to websites like ntfaq.com, windows200mag.com etc.