What is a layer file and how does it differ from a shape file, coverage or geodatabase?

The generic term layer is used to mean any geographic file. In addition, ArcView allows for the creation of a *.lyr file, also called a layer file. These *.lyr files store symbology, definition queries, and label settings in addition to the standard data source paths. This means that when you load an *.lyr file, the symbology will already be set. Once you load a *.lyr file, you can still make changes to the symbology from within ArcMap; this won’t change the *.lyr file on the server.

Several *.lyr files exist on the GIS server under M:\GISDATA\BaseLayers. There are subfolders within this folder for census, distbnd (districts and boundaries), facility, natural and trans.

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