Loopback Processing

Group Policy Example

<Domain>
   │
   ├───<Computer OU>
   │        │    
   │        └─(GPO 1) = Computer Settings 1, User Settings 1
   │             │
   │             ├───[LedHed-PC1]
   │             │
   │             └───[Server]
   │             
   │
   └───<User OU>
            │ 
            └─(GPO 2) = Computer Settings 2, User Settings 2
                 │
                 └───────[LedHed]

Legend

Name	Object Type
[LedHed-PC1]	Computer
[LedHed]	User

Standard Group Policy Processing

In the above example there are two Group Policy Objects (GPO).

GPO 1

GPO 2

Each GPO has two settings, Computer and User.

Group Policy applies Computer Settings to Computer Objects and User Settings to User Objects.

Under normal circumstances when the User [LedHed] logs on to Computer [LedHed-PC1] the following GPO settings are applied:
Computer Settings 1
User Settings 2

Loopback Processing

Loopback Processing changes the default behavior described above.
There are two modes Replace and Merge

Replace Mode

With Loopback Processing enabled in REPLACE mode, when User [LedHed] logs on to Computer [LedHed-PC1] the following GPO settings are applied:
Computer Settings 1
User Settings 1
As you can see User Settings 1 replaced User Settings 2

Merge Mode

With Loopback Processing enabled in MERGE mode, when User [LedHed] logs on to Computer [LedHed-PC1] the following GPO settings are applied:
Computer Settings 1
User Settings 1
User Settings 2

In this mode both User Settings 1 and User Settings 2 are applied, but if there is a conflict between these policies, then User Settings 1 takes priority.