Why can't Windows home editions connect to domains?

Microsoft doesn't allow Home editions of Windows to join domains because they figure that home users won't be connecting to any type of domain. Although that does suck, you do have to purchase the professional version of Windows in order to get that feature.

Don't be fooled by some of these answers, while you can't join a domain there are ways you can connect to a domain for running applications that require it if you have a domain account. You can use the runas /netonly command:

runas /netonly /user:mydomain\username "pathToFile/file.exe"

You will be prompted to enter a password and if the username and password provided does indeed match a domain user the given program in pathToFile/file.exe will run as if you where on the domain mydomain.

For example if you happen to need to access a database domain for running SSMS:

runas /netonly /user:dataxstream\username "C:\Program Files (x86)\Microsoft SQL Server\...\Ssms.exe"

Using this approach I was able to do all of my work related task on a Windows Home Edition computer.

It's basically market segmentation by Microsoft. They have decided that the Home editions cannot connect to the domain so they can price and support different products in a different way. You will continue to have to upgrade the Home editions unless you can find a vendor, such as CDW (just what my employer uses), that will provide the business versions pre-installed. Many of these vendors will ship next day, but for a price. It's up to you and your employer if you want to go that route.

Microsoft has also ensured that Home users likely will never use domains with the advent of the home group in 7 and 8, possibly Vista as well, though I'm not sure.

JustinD is on the right track.

The reason is simply that novice users like “grandmothers” are not expected to need that “advanced” functionality. Home users who check email, use social networks, play games, etc. are rarely going to need to connect to a domain and will rather connect directly to their modem or router.

Domains on the other hand are, um, the domain—pun intended—of enterprises, schools, etc. who need more advanced system administration and gateway-management abilities.

Therefore, Microsoft can put advanced functions like this in a different edition and provide a cheaper version for home users and a more expensive one for organizations.

Simple.

A license property doesn't allow it. Only the Professional Editions (pro/Enterprise) or the Ultimate have the license value WorkstationService-DomainJoinEnabled set.