DateTime2 is the new Data Type introduced in Sql Server 2008 for storing Date and Time value. As per MSDN, Microsoft Suggests to use this new Data Type for new work instead of DateTime.

Following table summarizes some of the major difference between this new DateTime2 and the old DateTime Data Type.

DateTimeDateTime2[(n)]
Min Value1753-01-01 00:00:000001-01-01 00:00:00
Max Value9999-12-31 23:59:59.9979999-12-31 23:59:59.9999999
Storage Size8 Bytes6 to 8 bytes
Note: Parameter n is optional and if it is not specified then fractional
seconds precision is 7 digit and it can be from 0 to 7 digit. For fractional seconds
precision <3, takes 6 bytes For fractional seconds precision 3 or 4 it will take
7 bytes For fractional seconds precision >4 it will take 8 bytes
UsageDeclare @now datetimeDeclare @now datetime2(7)
ComplianceIs not an ANSI/ISO compliantIs an ANSI/ISO compliant
Current Date and Time functionGetDate() – It returns DB Current Date and Time of DateTime Data Type

Example: SELECT GETDATE()
Result: 2011-09-16 13:23:18.767

SYSDATETIME()– It returns DB Current Date and Time of DateTime2 Data Type

Example:SELECT SYSDATETIME()
Result: 2011-09-16 13:23:18.7676720

+/- daysWORKS

Example:
DECLARE
 @nowDateTime DATETIME = GETDATE() SELECT @nowDateTime + 1
Result: 2011-09-17 13:44:31.247

FAILS – Need to use only DateAdd function

Example:
DECLARE
 @nowDateTime2 DATETIME2=
SYSDATETIME()
SELECT
 @nowDateTime2+1
ResultMsg 206, Level 16, State 2, Line 2
Operand type clash: datetime2 is incompatible with int

DateTime2 with fractional seconds precision of 3 is same as DateTime data type. And DateTime2(3) uses 7 bytes of storage instead of 8 byte which old DateTime datatype uses and it also provides higher date range (i.e. 0001-01-01 to 9999-12-31 ) compared to DateTime data type. Now let us see this with an example:

DECLARE @nowDateTime DATETIME = GETDATE(),
        @nowDateTime2 DATETIME2(3)= SYSDATETIME()
 
SELECT DATALENGTH(@nowDateTime) 'DateTime Storage Size',
       DATALENGTH(@nowDateTime2) 'DateTime2(3) Storage Size'
Result:
DateTime Storage Size  DateTime2 Storage Size
 --------------------- ----------------------
 8                     7