Sites help facilitate several activities within Active Directory, including:
Replication: Active Directory balances the need for up-to-date directory information with the need for bandwidth optimization by replicating information within a site more frequently than between sites. You can also configure the relative cost of connectivity between sites to further optimize replication.
Authentication: Site information helps make authentication faster and more efficient. When a client logs on to a domain, it first searches its local site for a domain controller to authenticate against. By establishing multiple sites, you can ensure that clients authenticate against domain controllers nearest to them, reducing authentication latency and keeping traffic off WAN connections.
Active Directory-enabled services: Active Directory-enabled services can leverage site and subnet information to enable clients to locate the nearest server providers more easily. For information about services, see Services.
Domains that are built starting with the Windows Server 2008 domain functional level automatically use DFS-R to replicate the Sysvol container, but domains that are upgraded or built at a lower functional level will continue to use NTFRS.
In order to migrate to DFS-R replication of Sysvol, the domain in question must be at the Windows Server 2008 or newer domain functional level.
To move to DFS-R, you will use the dfsrmig utility. The Microsoft Storage Team Blog has an extensive series on the process of migrating Sysvol to DFS-R replication.