Unlike traditional file systems, which reside on single devices and thus require a volume manager to use more than one device, ZFS filesystems are built on top of virtual storage pools called zpools. A zpool is constructed of virtual devices (vdevs), which are themselves constructed of block devices: files, hard drive partitions, or entire drives, with the last being the recommended usage. Block devices within a vdev may be configured in different ways, depending on needs and space available: non-redundantly (similar to RAID 0), as a mirror (RAID 1) of two or more devices, as a RAID-Z (similar to RAID-5) group of three or more devices, or as a RAID-Z2 (similar to RAID-6) group of four or more devices. In July 2009, triple-parity RAID-Z3 was added to OpenSolaris.
Thus, a zpool (ZFS storage pool) is vaguely similar to a computer's RAM. The total RAM pool capacity depends on the number of RAM memory sticks and the size of each stick. Likewise, a zpool consists of one or more vdevs. Each vdev can be viewed as a group of hard disks (or partitions, or files, etc.). Each vdev should have redundancy because if a vdev is lost, then the whole zpool is lost. Thus, each vdev should be configured as RAID-Z1, RAID-Z2, mirror, etc. It is not possible to change the number of drives in an existing vdev (Block Pointer Rewrite will allow this, and also allow defragmentation), but it is always possible to increase storage capacity by adding a new vdev to a zpool. It is possible to swap a drive to a larger drive and resilver (repair) the zpool. If this procedure is repeated for every disk in a vdev, then the zpool will grow in capacity when the last drive is resilvered. A vdev will have the same capacity as the smallest drive in the group. For instance, a vdev consisting of three 500 GB and one 700 GB drive, will have a capacity of 4 x 500 GB
In addition, pools can have hot spares to compensate for failing disks. When mirroring, block devices can be grouped according to physical chassis, so that the filesystem can continue in the case of the failure of an entire chassis. (Source