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What is List Definition and List Instance in SharePoint 2010?

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List definitions provide a template for you to create lists from.

A List Instance is a single "instance" of a list created from an aforementioned list definition. A List instance can also be instantiated with data.

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And it's worth noting that a list definition can be used by multiple list instances. It's sort of like the difference between a class, and an object in c# –  Andy Burns Dec 16 '10 at 9:47
    
Indeed, also not that in Visual Studio 2010, List Instances are NOT torn down when you stop debugging, and VS retracts your solution. –  James Love Dec 16 '10 at 10:25
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