Microsoft Knowledge Base Article 318753 contains the following summary:
This step-by-step article describes how to create System Policy settings for down-level client computers in a Windows 2000 domain. In a Windows 2000 network, you can use Group Policy settings to configure and control Windows 2000 and Microsoft Windows XP Professional-based computers. However, to configure Microsoft Windows NT 4.0, Microsoft Windows Millennium Edition (Me), and Microsoft Windows 98-based client computers, you must use System Policy settings. System Policy settings are different from Windows 2000 Group Policy settings in that they overwrite registry settings on the client computer with persistent changes. This behavior is known as "tattooing."