Server-free backup is an umbrella term for two different kinds of backup. The general distinction is that it is backup that is going to be done outside of the server that is being backed up -- hence the name. Some of the methods for doing server-free backup actually use another server, so some people don't consider them server free. But, they are still free of the server that is being backed up.
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There are a number of different ways that this is accomplished, and they generally have an alternate copy of the data, such as a business continuous volume (BCV) or a split-mirror, or perhaps a snapshot, and then present that data to some other system or device that can copy the data to tape. The typical way that this is done is via a dedicated backup server. So, you have a server that's being backed up. It's using data that's on the SAN, which is being controlled and split off and snapped by a backup server. Then, that extra copy of the data is presented to another server that transfers the data to tape.
There is another way, which is truly server free, which uses something called third-party copy, which is a SCSI command. Third-party copy can tell a device, such as a disk array that supports the command, to actually copy its data straight to a tape drive without having to go through a server.
Check out the entire Server-free Backup FAQ.