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Does raising domain functional level DFL have any impact on application using AD DS? Current DFL is Windows 2003 and we are planning to raise it to Windows 2008. Does this have any impact on sites hosted in IIS using Active Directory domain services? (Doesn't have a complete idea of all the sites whether they are using these active directory domain services or not 😟!)

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All kerberos tokens will be invalidated and need to be re-requested. This is due to both passwords for the krbtgt account is changed to enable support for the newer encryption types. For a vanilla workstation, there is usually no impact. For applications such as Exchange/SQL, it may be necessary to restart services or even the servers.

https://blogs.technet.microsoft.com/exchange/2015/02/13/considering-updating-your-domain-functional-level-from-windows-2003-read-this/

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