This article describes the function of the Reconciliation Depth setting in License Manager.
License Manager includes the ability to assign purchases to specific OUs and to reconcile those purchases against only that OU. When reconciliation is run against an OU only the licenses assigned to that OU or a lower level below that OU are used. For example, if your OU structure is:
My Company>New York
My Company>New York>Sales
My Company>New York>Marketing
Running reconciliation against My Company>London would use only purchases in the London OU and the OUs below that point, Development and HR. Purchases linked to the My Company or My Company>New York OUs would not be used to reconcile the London OU.
By default License Manager reconciles only the top level OU when reconciliation is run. This setting allows you to specify the number of levels deep reconciliation is run. Setting it to 2 would run reconciliation against My Company, My Company>New York, and My Company>London.