Load balancing distributes network traffic across multiple servers to optimize resource utilization, maximize throughput, minimize response time, and avoid overload. It improves availability and reliability. In Windows Server 2003, Network Load Balancing allows multiple servers to be grouped together and appear as a single virtual server to clients. Requests are distributed to servers using round-robin DNS or a hardware load balancer which rewrites requests and forwards them to cluster nodes based on performance metrics. Servers detect failures and new additions to ensure high availability.