What is the difference between Classic and Integrated pipeline mode in IIS7?

Classic mode is a mode where IIS only works with ISAPI extensions and ISAPI filters directly. In fact, in this mode, ASP.NET is just an ISAPI extension (aspnet_isapi.dll) and an ISAPI filter (aspnet_filter.dll). IIS just treats ASP.NET as an external plugin implemented in ISAPI. When an application pool is in Classic mode, IIS 7.0 handles requests as in IIS 6.0 worker process isolation mode. ASP.NET requests first go through native processing steps in IIS and are then routed to Aspnet_isapi.dll for processing of managed code in the managed runtime. Finally, the request is routed back through IIS to send the response.

This separation of the IIS and ASP.NET request-processing models results in duplication of some processing steps, such as authentication and authorization. Additionally, managed code features, such as forms authentication, are only available to ASP.NET applications or applications for which you have script mapped all requests to be handled by aspnet_isapi.dll.

Integrated mode, on the other hand, is a new mode in IIS7 where IIS pipeline is tightly integrated (i.e. is just the same) as ASP.NET request pipeline. ASP.NET can see every request it wants to and manipulate things along the way. ASP.NET is no longer treated as an external plugin. It's completely blended and integrated in IIS. When an application pool is in Integrated mode, you can take advantage of the integrated request-processing architecture of IIS and ASP.NET. When a worker process in an application pool receives a request, the request passes through an ordered list of events. Each event calls the necessary native and managed modules to process portions of the request and to generate the response.

There are several benefits to running application pools in Integrated mode. First the request-processing models of IIS and ASP.NET are integrated into a unified process model. This model eliminates steps that were previously duplicated in IIS and ASP.NET, such as authentication. Additionally, Integrated mode enables the availability of managed features to all content types.