Difference between Tier 1 and Tier 2 environment Dynamics 365 FO
Tier-1 Environment:
Single-box environment
All components are installed on the same server. These components include the Application Object Server (AOS), the database, Dynamics 365 Commerce, and the Management Reporter.
Microsoft SQL Server is used.
The architecture differs from the architecture of the production environment to maximize the efficiency and cost of the development team.
The environment can be cloud-hosted, or it can be deployed as an environment image (VHD).
The environment isn't suitable for UAT or performance testing.
Tier-2 Environment:
Multi-box environment
Components are installed on multiple servers.
Azure SQL Database is used.
The architecture is the same as the architecture of the production environment, even though this type of environment has a different sizing and isn't enabled for disaster recovery.
The environment can be deployed only as a standard environment or an add-on environment. It can't be cloud-hosted.
The environment is suitable for UAT and performance testing.