Master-SharePoint.com SharePoint Resource Blog

There is a separate web.config file for each Web Application / IIS Website which is running an instance of SharePoint. For example, if Sharepoint, Central Admin and the MySite host are all running as separate Web applications (different Application pools) on separate IIS sites, there will be a web.config file in the root of the virtual directory for each application. There is also a separate web.config file which contains configuration details for the “_layouts”, “_catalogs”, etc directories of SharePoint sites.