What is server farm in Sharepoint?

SharePoint Server farm environments can encompass a wide range of topologies, and can include many servers or as few as two servers.

A small server farm typically consists of a database server running Microsoft SQL Server , and one or more servers running Internet Information Services (IIS) and Office SharePoint Server 2007. In this configuration, the front-end
servers are configured as Web servers and application servers. The Web server role provides Web content to clients. The application server role provides Office SharePoint Server 2007 services such as servicing search queries, and crawling and indexing content.
A medium server farm typically consists of a database server, an application server running Office SharePoint Server 2007, and one or two front-end Web servers running Office SharePoint Server 2007 and IIS. In this configuration,
the application server provides indexing services and Excel Calculation Services, and the front-end Web servers service search queries and provide Web content.
A large server farm typically consists of two or more clustered database servers, several load-balanced front-end Web servers running Office SharePoint Server 2007, and two or more application servers running Office SharePoint
Server 2007. In this configuration, each of the application servers provides specific Office SharePoint Server 2007 services such as indexing or Excel Calculation Services, and the front-end servers provide Web content.
You can deploy Office SharePoint Server 2007 in a server farm environment if you are hosting a large number of sites, if you want the best possible performance, or if you want the scalability of a multi-tier topology. A server
farm consists of one or more servers dedicated to running the Office SharePoint Server 2007 application

- http://sharepointmagazine.net/technical/administration/best-practices-of-sharepoint-farm-configuring-and-deployment-part-1-architectural-and-logical-planning
- http://technet.microsoft.com/en-us/library/cc263157.aspx

- http://technet.microsoft.com/en-us/library/cc262243.aspx