Most often a bunch of fast machines with lots of memory in a rack on a gigabit LAN. The idea of a render farm is to distribute the effort of rendering among many machines, thus increasing speed (and possibly quality) tremendously. Many graphics-oriented companies, such as the creators of Riven or Pixar, have one or more render farms.
Very useful, if you have one, as they increase efficiency (at the cost of render walks).
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