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From: spprivate
Message 3 in Discussion

Hi, Dllhost.exe is a surrogate. Now,a surrogate is an executable which can host a Dll. 
In remote scenarios where the client application is usually running on a different 
computer the requests are sent across the network.  However in-process servers run in 
the client application�s address space, which is obviously not possible when the 
client and the in-process server are running on different machines.
To overcome this problem, DCOM uses DLL surrogates to manage in-process server 
components for clients when the client application and the COM component are on 
different machines. DCOM provides a default surrogate called dllhost.exe. MTS itself 
is simply a rather large, customised DLL surrogate application.    Cheers Satheesh

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