What is the GAC in SharePoint?

The GAC stands for the global assembly cache
 
It is the machine wide code cache which will give custom binaries place into the full trust code group for SharePoint. Certain SharePoint assets, such as Feature Receivers need full trust to run correctly, and therefore are put into the GAC. 
 
You should always try to avoid deployment to the GAC as much as possible since it will possibly allow development code to do more than it was intended to do.
 
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