Georeferencing CAD data is the process of aligning CAD geometry to a geographic coordinate system using a combination of move, scale, and rotate functions.
Unlike a GIS, CAD systems are designed to preserve area, shape, and distance. They use local Cartesian coordinate systems without a geographic referencing system. By default, CAD geometry does not account for any distortion that may occur with a geographic projection. As a result, CAD data can be very precise geometrically, but spatially inaccurate at the same time.
When you are integrating CAD data, you are often repurposing design data or as-built information that was originally created to perform a different role than a GIS. ArcGIS provides tools to streamline this process so that you can move forward quickly to define a coordinate system and spatially adjust your CAD data using familiar ArcGIS methods.