Plugin isolation mode signifies the level of security restrictions imposed on the plugin execution pipeline. The isolation mode is specified on the assembly level and not on the individual plugin step.
When a plugin assembly is registered, it can either be registered in an isolated or sandbox mode or in a none mode. The sandbox is more secure and some actions are restricted.
When a plugin is registered in a sandbox mode, although a plugin can still access the Dynamics CRM organization service and execute requests in accordance with Dynamics SDK, some of the functionalities such as accessing database or file directory are restricted. However, the plugin will still be able to access Azure Cloud Services endpoint
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