A Windows Failover Cluster uses shared storage– typically, this shared storage is on a SAN. When a SQL Server instance is installed on the cluster, system and user databases are required to be on the shared storage. That allows the cluster to move the SQL instance to any server (or “node”) in the cluster whenever you request, or if one of the nodes is having a problem. There is only one copy of the data, but the network name and SQL Server service for the instance can be made active from any cluster node.