Team Foundation Server - Area / Iteration

The short answer is that the area classification is the logical division of your product or project, and the iteration classification is its chronological breakdown into releases and development iterations.

The area path describes the logical part of the system that your work item relates to, e. g., which module or subsystem some bug was found in. Likewise, the iteration path tells you which iteration put release a work item should be handled in, for example, this task is for the third iteration of the fifth release.

The logical and chronological breakdowns can be done any way that makes sense to your team, as long add the structure remains that of a tree.

Does this help? Assaf.

One cool explanation that stuck with me is this one "think of Areas as slicing and dicing a team project by “functionality” (like UI, Business Layer, DAL etc), and think of Iterations as slicing and dicing by “time”. Iterations are like “phases” of a lifecycle, which can dissect the timeline of a project effort into more manageable time-based pieces."

The application and usage of areas and iterations seems to be a difficult choice for quite a few (myself included). There is of course also the consideration that you might want to have one or two physical "TFS projects" and place all your projects under that separated by areas and a larger hierarchical structure.

This blog post has some intersting questions and answers showing pros and cons on the matter: http://blog.hinshelwood.com/when-should-i-use-areas-in-tfs-instead-of-team-projects-in-team-foundation-server-2010/