This policy setting enables DC Locator to attempt to locate a DC in the nearest site based on the site link cost if a DC ...

This policy setting enables DC Locator to attempt to locate a DC in the nearest site based on the site link cost if a DC in same the site is not found. In scenarios with multiple sites, failing over to the try next closest site during DC Location streamlines network traffic more effectively.

The DC Locator service is used by clients to find domain controllers for their Active Directory domain. The default behavior for DC Locator is to find a DC in the same site. If none are found in the same site, a DC in another site, which might be several site-hops away, could be returned by DC Locator. Site proximity between two sites is determined by the total site-link cost between them. A site is closer if it has a lower site link cost than another site with a higher site link cost. 

If you enable this policy setting, Try Next Closest Site DC Location will be turned on for the computer.

If you disable this policy setting, Try Next Closest Site DC Location will not be used by default for the computer. However, if a DC Locator call is made using the DS_TRY_NEXTCLOSEST_SITE flag explicitly, the Try Next Closest Site behavior is honored.

If you do not configure this policy setting, Try Next Closest Site DC Location will not be used by default for the machine. If the DS_TRY_NEXTCLOSEST_SITE flag is used explicitly, the Next Closest Site behavior will be used.