A database in Hot-Standby mode can be local in each server or on a third computer on the network.

In the option with a database in each server, the active server (Hot) stores data on the local database and also on Standby server's database, thus keeping data synced.

Hot-Standby with local servers

In the second option, both servers (Hot and Standby) access the database on the network (the third server).

Hot-Standby with a server on the network