Hi, I have installed FIM following the documentation. I need a clarification on why we exactly need the domain level service accounts, instead of local accounts on the server? Regards Sai

Many of the accounts are used to support communication/delegation across application tiers, which requires the accounts to be created at the domain level.Frank C. Drewes III - Architect - Oxford Computer Group

That's traditional procedure Microsoft has required these days. Domain account is used as an identity for running services. It should be managed in Active Directory rather than using local accounts.Thuan Soldier SharePoint Vietnam | Blog | Twitter

Saikiran159, Some of the accounts can be local accounts. However, this will limit some of the scenarios. For example, if you use local FIMService account and SQL is remote, I don't know that you will be able to access SQL properly; local accounts only have scope on local box, there are ways to have computer account be used for remote access instead but I'm not sure that would work with FIM. So if FIM Service and FIM Sync service and SQL and portal are all on same box, you theoretically could use local accounts. This is definitely not a recommended practice, however, and an all-in-one instance doesn't scale well, either.