A datastore in the virtual environment used as a storage for your virtual inventory. Datastore stores Virtual machine files, log files, virtual disks & ISO images.
Datastore can contain different types of storages such as Local Storage of ESXi, iSCSI, NAS, SAN. You can create new datastores by formatting LUN’s or Mounting NFS. You can upload ISO images to datastore for guest OS installation.
Datastore can only use the 2 types of file system’s such as VMFS & NFS.
VMFS is the VMware’s highly optimized file system for the Virtual storage.
NFS is used on the NAS devices.