The issue of scale defines a fundamental difference between how GIS and CAD systems utilize coordinate systems. A GIS models the world and the objects on it at a regional or global scale. Conversely, a CAD system is used to model the actual objects at a scale that is relatively unaffected by the earth's surface. At this scale, design intent and geometric accuracy are the primary focuses of the analysis rather than actual geographic location. Consequently, CAD data is generally smaller in scale than GIS data but capable of high levels of detail.
This topic explains CAD coordinate systems and why integrating CAD data with maps can sometimes be problematic.
Coordinate systems
MicroStation and AutoCAD use 2D and 3D Cartesian coordinate systems that locate data at fixed coordinates. X-, y-, and z-coordinates are not inherently geographic locations; instead they are locations relative to an arbitrary geometric origin (0,0,0). The x-axis can be thought of as an easting direction and the y-axis as a northing direction, but they do not necessarily translate to grid directions in your spatial data.
Although it is possible to create CAD data that corresponds to the x,y coordinates of a projected grid zone, most CAD data is authored without this consideration. Typically, features are measured relative to other features using distances that have been measured at local ground elevations.
Linear units
Linear units in a CAD file are not dependent on, nor are they defined by, the data's coordinate system—they are a simple matter of the author deciding what the drawing units represent before he or she begins creating the data.
As a general rule, all CAD drawings (or models) are drawn at full scale (1:1). One drawing unit can represent any linear unit of measure such as inches, millimeters, meters, or feet. The decision usually rests on the level of detail the drawing is intended to capture. For example, the units in a drawing of the interior space of a building is likely to be in inches or millimeters, whereas a drawing of a survey plat or a landscape plan is likely to be in feet or meters.
Drawing scale and print media
Drawing scale is a display function performed in the drawing's page layout views. It is independent of the actual CAD model data and generally has no effect on how the data is displayed in ArcGIS Desktop. Usually a mismatch between drawing units and the assigned spatial reference, rather than drawing scale, is the root cause of scaling discrepancies encountered in ArcGIS when working with CAD data.
Print media usually conforms to a common standard such as that of the International Organization for Standardization (ISO) or North American paper size standards used by architects and civil engineers.