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Application _layouts Page Type
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Application pages, which are also known as "_layouts" pages, are stored in a site's Microsoft Internet Information Services (IIS) virtual directory and support application implementations. Application pages include pages with names such as create.aspx, settings.aspx, and other similar _layouts pages
The concept of "layout pages" in Microsoft Office SharePoint Server 2007 is different from the Windows SharePoint Services 3.0 _layouts page type.
These pages are stored in the virtual directory for the SharePoint Web application. The _layouts directory is also virtualized as a subfolder of every SharePoint site, and is exposed in a site collection or subsite, for example, http://MyServer/_layouts/Mysite.aspx or http://MyServer/a/b/c/_layouts/Mysite.aspx.
By default, the _layouts folder is installed in the path C:\Program Files\Common Files\Microsoft Shared\Web Server Extensions\12\TEMPLATE\Layouts.
Note When you create hard-coded URLs to custom pages that you place within the LAYOUTS directory, specify paths that use the root Web site of the site collection, but that do not include subsites within the path. For example, use /_layouts/pages/MyPage.aspx, not /MySubsite/_layouts/pages/MyPage.aspx. Specifying a subsite in the path prevents the page from being accessed.
Application pages are processed differently from content pages, as follows:
Application pages are not subject to the same restrictions as content pages about where custom code is allowed. In fact, application pages behave much like all other ASPX pages.
Application pages, unlike content pages, cannot host SharePoint features such as dynamic Web Parts and Web Part Zones.
For more information, see Content Page Type.