In-Process Components

In .NET, components built as DLLs run within the process space of the host application and share memory and processor time with their host applications. At run time, the component (which is part of the host application's assembly and is referenced by its manifest) is loaded from disk and added to the host application's process space. Because no remote procedure calls are generated to mediate communication between the component and its host, setting and reading property values, invoking methods, and responding to events raised by the component occurs very quickly.

Out-of-Process Components

An alternate architecture involves server applications that run as independent processes outside of the client application process space. These server applications usually (but not always) have an EXE file name extension. When Windows loads an out-of-process component, a separate process space is created for the component, and Windows manages the out-of-process component's resource requirements independently of the client application. Windows mediates the dialog between the server application (that is, the component) and the client (the consumer) by passing messages between them.