The Project Key becomes the prefix for tasks created within that Project. For Example:
I have a Project, 'JIRA Support', with a Project Key of 'JIRASUP'. Each task created in the JIRA Support Project begins with the Project Key, so 'JIRASUP-1' is the task number. This helps identify the task to the project, especially if you have multiple projects. So, a second Project might be 'Project Two', with a Project Key of 'PT'. Tasks created in this Project start with 'PT-'. So, you can easily identify for which project a task has been created. I hope this helps.
The Project Key is only required when creating a Project, but its benefits for ease of project identification and for reporting outweigh the need to enter this value at start up, in my opinion.
Our organization creates one Project per customer, so each team works within their project, while management can run reports to gather metrics across one or all projects. It also keeps users focused on their project instead of trying to determine which task(s) belong to their customer via some other mechanism (custom field, label, etc).
We have used both approaches 1) one project for all tasks and 2) project per customer and the general consensus is option 2 is cleaner, more organized, and eases activities and reporting processes.
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