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How does the cPanel "add on domain" feature, which allows to host multiple top level domains (TLDs) on a single server, work under the hood?

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To clarify, a top level domain is something like com or org; you aren't hosting those ;) –  Shane Madden Sep 1 '11 at 14:49
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It uses Apache's virtual hosting support, see http://httpd.apache.org/docs/2.2/vhosts/ for documentation.

When you add a new add-on domain it adds a vhost entry to the Apache configuration file(s) for that domain, with the DocumentRoot and ServerName properties set accordingly.

There is more work involved for HTTPS support as (unless you can guarantee all connecting client applications support SNI, which any version of Internet Explorer on Windows XP does not) you need to ensure that the domain is served on a particular IP address rather than being able to specify *:443 as the listening location.

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