NOTE: All the answers are excerpts from related reference web pages.
How time zones are handled with NTP?
NTP does not regconize time zones, instead it manages all time information based on UTC. In general the handling of time zones is a job of a computer’s operating system. Under Windows, Linux and FreeBSD the system clock is based on UTC, the configured local time zone only is applied when a time information has to be displayed somewhere. Example: If you configure Windows to use your local time zone, the system clock continues with using UTC time. Only when the date/time is shown (e.g. in a clock application), it will be transformed from UTC into the locally configured timezone.
UTC (Coordinated Universal Time) is the name of the international time standard and is identical to GMT (Greenwich Mean Time), which was commonly used as a world wide time base. GMT and therefore UTC are both referring to the zero longitudinal meridian, which runs through Greenwich in England. UTC is based on a 24 hour time scale, therefore 03:00 o’clock P.M. equals to 15:00 UTC. No daylight savings time is used for UTC; there are no switchovers from DST to non-DST periods in this universal time zone. The German standard time is called central European time (CET), which is one hour ahead of the UTC. The coordination of the UTC is being managed by the BIPM which also maintains the accordance of the global UTC.
UTC, Timezones, and DST in RHEL6
As NTP is entirely in UTC (Universal Time, Coordinated), Timezones and DST (Daylight Saving Time) are applied locally by the system. The file /etc/localtime is a copy of, or symlink to, a zone information file from /usr/share/zoneinfo. The RTC may be in localtime or in UTC, as specified by the 3rd line of /etc/adjtime, which will be one of LOCAL or UTC to indicate how the RTC clock has been set.
Modern operating systems distinguish between the following two types of clocks:
A real-time clock (RTC), commonly referred to as a hardware clock, (typically an integrated circuit on the system board) that is completely independent of the current state of the operating system and runs even when the computer is shut down.
A system clock, also known as a software clock, that is maintained by the kernel and its initial value is based on the real-time clock. Once the system is booted and the system clock is initialized, the system clock is completely independent of the real-time clock.
The system time is always kept in Coordinated Universal Time (UTC) and converted in applications to local time as needed. Local time is the actual time in your current time zone, taking into account daylight saving time (DST). The real-time clock can use either UTC or local time. UTC is recommended.