What is DLL Hell

When a dll is overwritten by a newly installed application which was used by some other application so this lead to system break.

Previously, before .NET, this used to be a major issue. "DLL Hell" refers to the set of problems caused when multiple applications attempt to share a common component like a dynamic link library (DLL) or a Component Object Model (COM) class. In the most typical case, one application will install a new version of the shared component that is not backward compatible with the version already on the machine. Although the application that has just been installed works well, existing applications that depended on a previous version of the shared component might no longer work. In some cases, the cause of the problem is even more subtle. In many cases there is a significant delay before a user discovers that an application has stopped working. As a result, it is often difficult to remember when a change was made to the machine that could have affected the application. A user may remember installing something a week ago, but there is no obvious correlation between that installation and the behavior they are now seeing. The reason for these issues is that version information about the different components of an application aren't recorded or enforced by the system. Also, changes made to the system on behalf of one application will typically affect all applications on the machine.

One reason why it was hard to build an isolated application was the run-time environment typically allowed the installation of only a single version of a component or an application. This restriction means that component authors must write their code in a way that remains backward compatible, otherwise they risk breaking existing applications when they install a new component. In practice, writing code that is forever backward compatible is extremely difficult, if not impossible. Also components were shared because disk space and memory was expensive. In the past few years, hard disk and memory prices have dropped dramatically, and disk space is no longer a premium. But as applications have increased in size and in modularity not so long ago many applications were entirely self-contained in a single .exe file - the DLL sharing issue has not been addressed, and the problem has grown over time. 

How it is solved ????

How .NET addresses DLL Hell?

Microsoft .Net 1.1, which is integral to the Windows Server 2003 operating systems, supports strong binding. Strong binding means an application or component can bind to a specific version of another component, so you can reuse components or use them in isolation.

.Net 1.1 will provide Windows Server 2003 operating systems with a Global Assembly Cache. This Cache is a repository for all the .Net components that are shared globally on a particular machine. When a .Net component is installed onto the machine, the Global Assembly Cache looks at its version, its public key, its language information and creates a strong name for the component. The component is then registered in the repository and indexed by its strong name, so there is no confusion between different versions of the same component, or DLL.

Windows 2003 Server also uses rules to make sure that an application finds the right component and version. The system will first look for a local version of the component, and will then look in the cache to find an exact match for the strong name of the required component. Failing that, the system will use heuristics to find the next best component, but by default an application will always run against the component that it was built and tested against. Administrators will be able to override these rules for exceptional cases.

Another feature of Windows Server 2003 is that .Net components will have no registration policy. This means it will be easy to take a .Net component on server and copy to another server. Microsoft is calling the feature xcopy deploy, after a command used in DOS to copy capability files, directories and even whole drives from one destination to another. It means you can copy applications instead of reinstalling them and the whole process becomes much simpler.

Also, .NET Framework 1.1 introduced something called side-by-side execution. Side by side is the ability to install and run multiple versions of the same component on the machine concurrently at the same time without interfering with each other. With components that support side-by-side, authors aren't necessarily tied to maintaining strict backward compatibility because different applications are free to use different versions of a shared component.