Microsoft Knowledge Base Article 883272 contains the following introduction:
Administrators can use the Microsoft Distributed File System (DFS) to organize shares on different servers into a single
logical namespace. Administrators can also use the File Replication service (FRS) to replicate the contents of DFS replica sets
between designated servers and to replicate the contents of the Sysvol folder between domain controllers.
Active Directory uses FRS to replicate the contents of the SYSVOL folders between domain controllers. Replication of Sysvol folder content is mandatory and occurs on the same schedule as Active Directory. DFS uses FRS to automatically synchronize replica content between servers. Administrators can schedule the replication of DFS roots and links when servers are available or network conditions are favorable. You can also use FRS to include or to exclude specific files in a replication schedule.
Note You can deploy DFS with or without FRS. You can also use third-party products to replicate content between DFS roots.
The FRS staging folder is a temporary store for files that are replicated to downstream partners of Sysvol or DFS replica sets. This article describes how FRS chooses the location of the staging folder for files to be replicated.