sharepoint adminsitration and website specific administration

I wish to know as what is the difference between giving permissions to users at the following levels:

1. sharepoint administration website- Central administration\site settings\permissions

2. sharepoint administration website-Application management\Policy for web application

3.Created website- Adding a user under Peoples and Groups header

I need to know what is significance of each level and is there an hierarchy and overriding which happens.

One more query, we have a active directory group defined in our local domain.Our domain name is nature and group name is testors.

Now i need to give full access permissions to this group for a particular sharepoint website created.When i give this permission using 1 & 2(described above), these permission doesn't take effect(i continue getting access deneied until i add each user of the group seperately to the permitted user list).When i try to give permission to this group at website level(point 3), it doesn't recognises the group.Is there some specific reason to this and any remedy for this

[1095 byte] By [CanUHelpMe] at [2007-12-30]

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