A SharePoint Sandbox is used to segregate custom developed or third party software. When a sandbox is used, the software is restricted to a site collection rather than being available to the entire SharePoint farm. The use of a sandbox decreases development time since a site collection administrator can deploy sandboxed solutions, rather than requiring the intervention of a farm administrator. SharePoint monitors the amount of resources (RAM and CPU time) that the software uses as it runs. If the software exceeds the amount of resources allocated to it for the day, SharePoint will shut it down. This prevents the software from causing performance problems for the rest of the SharePoint site. Otherwise, a badly behaved software package could affect the entire SharePoint farm and all of the other clients using SharePoint.
A sandbox can also be used to ensure that only people with access to the sandboxed software can use it. Depending on how the software is licensed, this can ensure that license restrictions are observed.
For a description of the sandbox, please read:
While farm solutions run as fully trusted solutions, sandbox solutions run as partially trusted solutions. Because sandboxed solutions are only partially trusted, there are a number of features available to farm solutions that will not run in a sandbox. These features include:
For more information on SharePoint sandboxes and their limitations, see: