(This document was updated 3/15/04 to include D&D 3.5 terminology.)
If you have taken a look at the Forgotten Realms Campaign Setting (and with D&D 3.5 it's in the DMG), you've probably seen the section that talks about "powerful races" like drow and other monsters, and how to balance them compared to core Player's Handbook characters with the "effective character level adjustment" (it's on page 21 of the FRCS ... in D&D 3.5 it's just called "level adjustment"). If you look at the numbers and compare them to what's in the Monster Manual, you may end up with a question very much like this one:
Question: Why is a drow CR equal to "class level +1," but its LA is +2? Which should I use?
Answer: CR and LA measure different things, and you shouldn't
confuse the two. Let's define the terms. (Red sentences
A 2-HD monster with damage reduction 10/+1 isn't much more powerful than a typical 2-HD monster, such as a gnoll. The monster is more of a threat to low-level parties, so it might merit a +1 to its CR compared to an gnoll (giving it a CR of 2).
However, that same creature as a PC race is much more powerful than a human or an elf. This is because if the creature is a monster for the PCs to fight as an encounter, it only gets the benefit of its damage reduction for a few rounds before the heroes kill it. If it is a player character, it gets its damage reduction every single combat for the life of its adventuring career. The monster is effectively immune to the attacks of most normal weapons (since most normal weapons can't do more than 10 points of damage without a critical hit), making the character almost invincible at lower levels. Such a monster should deserve at least a LA of +1, and probably should actually be LA +2 ... the monster is about as tough as a 2nd or 3rd level character.
An example is the drow elf. Drow have a CR adjustment of "class level +1" and a LA of +2. Thus, an NPC drow Ftr5 has a CR of 6. However, that drow Ftr5 as a PC is treated as a 7th-level character (5 class levels plus the LA adjustment of +2 = 7). This is because the drow's spell resistance and other magical abilities are more valuable if he gets to use them over and over again, which he will get to do as a PC because he's played in multiple sessions, instead of being killed after one fight if he were a "monster."
So don't confuse CR with LA (or ECL). LA tends to be higher than the CR adjustment
for a creature because in the long run a PC with special abilities gets
to use them more often than a monster with those same abilities.