Group policies are collections of user and computer configuration settings that specify how programs, network resources, and the operating system itself work. Group Policy provides you tools to set a user or computer management setting to a desired value, and allows you to apply the changed setting throughout the network to a desired subset of users or computers or to any individual user or computer.
You should always remember that the Group policy settings you made will be only apply to machines running Windows 2000 family Operating Systems, Windows XP, and Windows Server 2003 Server.
Group Policy can be broadly classified into two. First one is the Local Group Policy, which is available locally for a Windows 2000 family Operating System, Windows XP, or Windows 2003 Server, which is not a member of Active Directory Forest. Second one is Active Directory based Group Policy, which will be effective when your machine is made a member of an Active Directory Forest.
There are two categories for Group Policies, one which is applied to computers and other one which is applied to users. Computer policies are applied upon boot of the machine, are in place before logon, and are independent of the user login credentials. They apply to the computer only, regardless of who will be logging in. User policies are applied when the user logs in and occur during login. They apply to the user regardless of what computer or server the user is logging into.