Application pages are very important in context of SharePoint. Application pages are stored in layout folder. Unlike site pages (for example, default.aspx), a custom application page is deployed once per Web server and cannot be customized on a site-by-site basis. Application pages are based in the virtual _layouts directory. In addition, they are compiled into a single assembly DLL. A good example of an Application Page is the default Site Settings page: every site has one, and it’s not customizable on a per site basis (although the contents can be different for sites). With application pages, you can also add inline code. With site pages, you cannot add inline code. Typically, you link custom application pages to application.master, the master page file that is used by the default application pages in Windows SharePoint Services. You should also write application pages to inherit from a base class defined inside the Microsoft.SharePoint assembly named LayoutsPageBase.
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