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Applications are just a grouping of 1 or more components, they inherit their status from their worst component.
Components will normally be in just a few states:
Up - Everything is good
Down - Solarwinds either cannot complete the test that the component requires, or the component has completed the test and failed. For example an http monitor that cannot load the page will be down, an event log monitor that has found an event that you don't want in the log will be down, or a script monitor that can't run because you have a credential error would be down.
Unknown - Usually happens when you have a polling error or just added the component and it hasn't completed the first poll. Sometimes this will have an error message associated with it that might help you figure out what is wrong, lots of times it won't and you have to dig deeper to figure out why Solarwinds can't poll that component.
Warning/Critical - The component went through the test and came back with values, but the values are higher than some threshold we defined when we created the component. So for the http monitor maybe the response time was very slow, or a perfmon counter is returning a very high value, typically these indicate the the thing we are testing works, but is performing badly.
There are lots of other statuses but those are the key ones to be aware of.
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