A data domain is used to set business rules for a data element, and by extension, for attributes defined by that data element.
For example, if one of your business rules is “All ID codes used in our business must be alpha-numeric,” you define a data domain named Standard_ID as character. A data element Customer_ID in the Customer entity would then be defined with the domain of Standard_ID; data element Auto_ID in the Car_Pool entity would also be defined with the domain of Standard_ID. If the business rule changes to “All ID codes used in our business must be numeric,” you need change only the datatype of Standard_ID for all models and definitions to conform.