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I agree with everything said here and wanted to add; there are many reasons to create and manage multiple web applications. Typically I recommend this all being driven from governance, business requirements and IT service level agreements. There is a balance between physical server, web application,...
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When you need to create a separate content database with a separate authentication mechanism, you should add a web app. If you just need to show the same content to a different user group, extend the web app. If you have a lot of web apps, pay special attention to the performance tuning of those application...
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Under what conditions do we setup separate web apps ?