The item master you know becomes two things in D365 — a shared product definition and a released product per legal entity — with variants, dimension groups, categories and units layered on top. How to model that without exploding your catalogue.
Ask anyone who runs a warehouse what an item is and you will get a confident answer: it is the thing on the shelf, and it has a number. That answer has served your business well, and it is why the item master in most ERPs is a single flat table where one row is one thing you buy, hold or sell.
A shared product exists once in the environment. It carries what is true about the article no matter who sells it: its number, its name, its product type, whether it has variants, and which product dimensions apply.
Which of these are active is set by the product dimension group assigned to the master. Turning one on is a commitment: every transaction for that product must then specify a value.
Three group objects attach to a released product, and beginners routinely confuse them because the names are so similar. They decide entirely different things.
Classification is what categories are for, and D365 keeps several category structures rather than one flat field.
Units are the least glamorous part of product data and one of the most reliable sources of go-live pain.
Default order settings hold the operational defaults per released product: the default site and warehouse, minimum, maximum and multiple order quantities, lead times, and whether the product is stopped for purchase, sale or inventory.
A short section, because it is the part that decides whether the model survives contact with reality.
The item master you know becomes a layered model in D365, and the layers exist to describe things a single flat row cannot.