Your Microsoft license key is tied to the organization name that you enter when installing CRM. Good reasons for this, of course.
This would normally mean that to install a development server without having to purchase a new license key, it needs to exist in an independent domain. (Because the CRM Organization Name is used to create the Active Directory OU.)
At one of our clients, though, we discovered they had a development server in the same domain, using the same license key. How did this happen?
Well, it turns out that the license key validation ignores punctuation. So the production server looked like:
Organization Name: MyCompany INC
AD OU Name: MyCompany INC
SQL DB Name: MyCompany INC_MSCRM
The DEV server was:
Organization Name: MyCompany Inc.
AD OU Name: MyCompany Inc.
SQL DB Name: MyCompany INC__MSCRM (note the double underscore)
In the database name, it converted the period to an underscore, so even the databases could exist on the same SQL server, if that were required.
There are, of course, some nice advantages to having the DEV server in a DEV domain, but for smaller clients that don't have tons of spare servers sitting around, this could come in handy.