Why do you use the App_Code folder in ASP.NET?

The App_Code folder is automatically present in the project.
It stores the files, such as classes, typed data set, text files, and reports.
If this folder is not available in the application, you can add this folder.
One of the important features of the App_Code folder is that only one dll is created for the complete folder, irrespective of how many files it contains.

In a Web site project, you can store source code in the App_Code folder, and it will be automatically compiled at run time.
The resulting assembly is accessible to any other code in the Web application.
The App_Code folder therefore works much like the Bin folder, except that you can store source code in it instead of compiled code.
The App_Code folder and its special status in an ASP.NET Web application makes it possible to create custom classes and other source-code-only files and use them in your Web application without having to compile them independently.
The App_Code folder can contain source code files written as traditional class files — that is, files with a .vb extension, .cs extension, and so on.
However, it can also include files that are not explicitly in a specific programming language.
Examples include .wsdl (Web service description language) files and XML schema (.xsd) files.
ASP.NET can compile these files into assemblies.

In Opened Source for Classes When the Project Published hold the .dll files

App Code folder is new when2.0 is launch and it contains all the class files and they are compiled automatically and can be use through out the application for more information please visit: http://forums.asp.net/t/1026147.aspx/1 Please make if you like

We use app_code for classes and typed datasets to be automatically accessible throughout the whole application, it compiles them automatically.
It automatically creates type data sets from .xsd (XML schema) files, and creates XML web service proxy classes from WSDL.

The App_Code folder is used to store source code files that are not directly tied to a specific web page (such as code-behind file) but are to be compiled for use by your web site.
Code within the App_Code folder will be automatically compiled on the fly on an as-needed basis.
After this point, the assembly is accessible to any other code in the web site.
To this end, the App_Code folder is much like the Bin folder, except that you can store source code in it instead of compiled code.
The major benefit of this approach is that it is possible to define custom types for your web application without having to compile them independently