The boundary is the extent of all the raster datasets, defined by their footprints, within the mosaic dataset. It is a polygon feature class stored in the geodatabase. The boundary is created using the Build Boundary tool or as an option when using the Add Rasters To Mosaic Dataset tool. It is essentially created by merging all raster footprints (not including service overviews) into a single or multipart polygon. Once it's created, you will be able to view it in the ArcMap table of contents as a layer that is part of the mosaic dataset's expanded view.
The boundary is used to determine the spatial extent of the mosaic dataset. It is not necessary to have a boundary that is a union of all the footprints; therefore, the Build Boundary tool allows you to simplify the boundary using a convex hull method or by calculating the envelope of the mosaic dataset. These options are recommended to when creating mosaic datasets containing rasters covering the world's extent or when boundaries have many vertices (such as greater than 5000).
The mosaic dataset can be clipped to the boundary, meaning, when viewing the mosaic dataset, the mosaicked image is clipped to the boundary feature class. If your mosaic dataset contains raster data that extends beyond the boundary, this data will not be visible in the mosaicked image. Therefore, even if you have raster data that extends beyond the area you want displayed in the mosaic dataset, you can limit what is viewable by modifying the boundary.
To clip the mosaic dataset by it's boundary, set the Always Clip the Mosaic Dataset to its Boundary property to Yes in the Mosaic Dataset Properties dialog box.
In the example below, the boundary is the full extent of all the raster footprints:
In the example below, the boundary has been edited. The footprints still represent their full extent; however, the mosaicked image is cropped by the extent of the boundary. There is no loss of image data. If you edit this boundary to extend it outwards, the image data that you cannot see will appear. This is because you are not editing the source data, just the boundary of the mosaicked image.
The boundary can be edited using the standard ArcMap editing tools. You can also replace the boundary file with another polygon feature class using the Import Mosaic Dataset Geometry tool.
The coordinate system for the boundary is defined by the coordinate system of the mosaic dataset.