Organizational Unit (OU) is a special container of Active Directory, which is used to organize Active Directort objects within a domain into administrative groups or simply an organizational unit (OU) is a logical group of Active Directory objects. An OU can contain objects like user accounts, groups, computers, printers, file shares, and other OUs from the same domain.
Organizational Units (OUs) can be used to divide a domain into groups that mirror the functional or physical divisions within an organization. Organizational units are limited within a single domain. It is possible to implement OU hierarchy within each Active Directory Domain.
Organizational units can be created within Active Directory domains as folders in a file system. Once you have created an Organizational Unit (OU) hierarchy which fit your company's business structure, you can store objects in OUs just like files inside folders. By creating a hierarchy, the difficulty of administration of Active Directory objects can be reduced to a great extent.
The administration of each Organizational Unit (OU) can be delegated to different administrators. For a large organization spanned over different geographical location it is better to give the permission to local administrators to manage individual Organizational Unit (OU) (creating users, creating groups, resetting forgotten passwords etc).
Another feature of Organizational Units (OUs) is that you can assign Group Policies to the users and computers in each OU. In Active Directory, Group Policies can be assigned only to Active Directory domains, Active Directory sites and Organizational Units (OUs).