version compatibility

on the project properties dialog box, under the component tab are the radio buttons for version compatibility. What is that for. I have one activex.exe project that compiles great with the "project compatibilty" checked and one that won't compile if it is. Also, I have some references in the later project that won't work unless the "project compatibilty" radio button is selected even though it won't compile when it is.
zeneAsked:
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MirkwoodConnect With a Mentor Commented:
About Binary and project compatibility:

Binary compatibility means that you have a agreement with the compiler that your interface to the outside world wont change.
The compiler verifies this with a reference exe/dll/ocx. Tip: rename the reference binary to .rfe/.rfd/.rfo to know it's a reference and not an actual binary. In exchange for this agreement, the compiler makes sure that you can savely recompile your project without losing compatibility with the client of the project. So, you don't have to recompile the exe when you have recompiled an dll. This feature is great for shipping projects. You know when you can safely update a binary since the interface has not changed.

Project compatibility is great for debugging purposes. This says: all projects within this project group will be kept compatible. That means, you can modify the interface but the client will still work. Example: a project group has an exe and a dll. Recompiling the dll will not give any problems for running the exe. Running exe outside of this project group will however give a problem. They are not compatible.
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