In my world, if someone has domain knowledge, then they have a specific skill in a well defined area. In other words, a person with strong domain knowledge can be classified an expert – a person with very deep, but generally, narrow knowledge. Say for example you are a mechanical engineer and you are considered a domain expert in internal combustion technologies.
Now however, say you are different mechanical engineer but this time you have working knowledge of the entire car. In this case your knowledge of internal combustion technologies is much shallower however the scope of your knowledge is subsequently much broader, in this case you see the car as a composition of multiple components and you have a working knowledge of each component.
Why do I care about this distinction? I care because it is an important factor in knowing the innovational strength of the workforce. Individuals with strong domain knowledge (aka Experts) are wonderfully skilled at addressing tough technical problems. However those with system knowledge are much better at addressing those hurdles which cross one or more areas of expertise. System experts, if you will, have a greater ability to connect diverse ideas and people and they are therefore able to bridge the information silos that tend to exist in any corporation.
Either type of knowledge is valuable within an innovation environment. It is just a matter of knowing what type of knowledge people possess and where it can be used the best.