Local logical system is not defined

Hello Every One,

I have installed new CRM 5.2 system.Now when i am trying to create a business partner its giving me an error " Local logical system is not defined".I have read many threads about it but i want to know the meaning of this error

1.)What meant by logical system here in is the error?Why we need logical system?

2.)I have read that i need to define a logical system and then assign it to a client.I have two clients?which client i have to assign this logical system.

I have no idea about creating logical system and then assigning to client.Please an somebody let me know the detaild steps to fix the issue.It will be great if u can let me know the reason for this error and why we need logical system.Thanx a lot

Kind Regards

Usman