In short, an application boundary defines the scope of an application. The exact interpretation would depend on the audience and the position you are applying.

For example for .NET developers example of application boudary can be viewed as an application domain which forms an isolation boundary for security, versioning, reliability, and unloading of managed code. Threads are the operating system construct used by the common language runtime to execute code. At run time, all managed code is loaded into an application domain and is run by a managed thread.

From the other hand for PM and QA positions the application boundary would indicate the border between the software being measured and the user (IFPUG Counting Practices Manual, Release 4.1, January 1999).

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