The nature of community custody requires careful elucidation. Although community custody regimes vary widely, they share many common elements, and all differ in important ways from terms of imprisonment in a penal institution. This chapter compares and contrasts community custody and institutional imprisonment. Imprisonment is exclusionary, destructive and anathema to the sentencing objectives such as restoration and rehabilitation. In contrast, community custody is an inclusive sanction; although carrying a punitive element, it also encourages rehabilitation and restoration. Community custody is also an active disposition; offenders are encouraged to use their time, rather than simply pass it in a prison cell. Indeed, through the use of specific conditions, many community custody orders compel this kind of active participation in the sentence. The ‘virtual prison’ therefore has the potential to offer much more than its institutional counterpart. Comparisons between the two sanctions must also address the following question: to what extent can community confinement promote the traditional goals of sentencing? The response to this question must perforce be comparative rather than absolute in nature. For example, how much more (or less) effective than prison, or the alternative punishments, is community custody? In this chapter I therefore examine the relationship between community custody and some of the traditional purposes of sentencing.