3) Project a data file the fly” - this is done automatically in ArcMap for datasets “on that have a defined projection (see 1 above) when the data are added to ArcMap. The data is projected on-the-fly to the coordinate system of the Data Frame. This does nothing permanent to the stored coordinates of a dataset. The new coordinates needed to project Projection on-the-fly fails if the dataset coordinate on-the-fly are stored in memory only. system is not properly defined, or if it not defined at all.
3) Project a data file “on the fly” - this is done automatically in ArcMap for datasets that have a defined projection (see 1 above) when the data are added to ArcMap. The data is projected on-the-fly to the coordinate system of the Data Frame. This does nothing permanent to the stored coordinates of a dataset. The new coordinates needed to project on-the-fly are stored in memory only. Projection on-the-fly fails if the dataset coordinate system is not properly defined, or if it not defined at all.
ArcGIS%20Projection%20Demo%202014.docx