Come on people, give a good answer.
Domain:
Holds a central database repository of usernames and passwords. All computers are authenticated within the domain, thereby granting access from a central point. This has increased security and helps manage multiple computers easily. This is a very basic explanation.
Within a domain, you authenticate against a domain server (domain controller). This will grant you access.
Workgroup server-
Independent computer setup. Anyone can access this computer remotely from another computer if they know a username and password on the server. Each person authenticates against their computer, unlike a domain where each user authenticates against a server. Workgroup servers are very basic, lack security, and can be a pain to manage in larger environments.
For more info look up the difference between a Domain and Workgroup.