I am creating this post more for my own reference. There are times when I have to look at what all new features a particular functional level has offered. I don’t need to create chart as its already on technet. Here is the link:
A very important point to note is with versions of Windows Server that are earlier than Windows Server 2008 R2, you cannot roll back or lower a functional level under any circumstances. If you have to revert to a lower functional level with a version of Windows Server that is earlier than Windows Server 2008 R2, you must rebuild the domain or forest or restore it from a backup copy. With Windows Server 2012 and R2 it is possible to roll back forest and domain functional level with limitation as defined in table in the link.