A good source of information on this topic is SQL SErver Books Online.
Remarks from Books Online
SQL Server allows the row identity property on a single column within a table. Identity, like a primary key, identifies a row uniquely. SQL Server implements row identification using a numeric value. As rows are inserted, SQL Server generates the row value for an identity column by adding an increment to the existing maximum value.
A SQL Server column with identity must have a numeric data type that can be represented as an integer. For example, columns with the SQL Server data types int and decimal(4, 0) can have identity assigned.
If TRUE, this is, or will be, the single identity column for this table.
If FALSE, this column does not have the row identity property.
Jaime E. Maccou
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what does identity do
