Active Directory uses multi-master replication where changes made on any domain controller are replicated to all domain controllers. It identifies data to replicate by tracking changes using unique update sequence numbers for each domain controller. The replication topology is generated within sites by the KCC and between sites by the ISTG. Replication occurs on a schedule with urgent replication occurring immediately and password replication being handled differently. Active Directory replication can be monitored and troubleshooted using tools like the Active Directory Replication Monitor.