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I'm traveling to Copenhagen from Sri Lanka, Colombo. (Sri Lankan passport holder)

When I travel to AMS from Flight and take a train from AMS to CPH seems pretty cheap. So If I'm going to do that which embassy should apply for the Visa? I will stay my time in Copenhagen and use AMS are entry and exit from the Schengen area.

I'm travelling to a conference and the invitation letter is from Denmark business entity.

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You should apply for a Schengen visa from Denmark. That is the location of the main purpose of your visit (the conference) and where you will be spending most of your time. It is perfectly ok to enter the Schengen area in Amsterdam with a Danish visa. If you're asked any questions at the border, you can just tell them that you are proceeding to Copenhagen and show your train tickets if needed.

However, keep in mind that Amsterdam is not particularly close to Copenhagen and a train will take 11+ hours with several changes. It will be much faster to fly, and quite possibly cheaper as well.

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