There are three types of geodatabases: File, Personal, and ArcSDE. Selecting the appropriate geodatabase to work with will depend on the specific requirements of your GIS project and/or application.
Each geodatabase is held in a file folder, and each dataset is stored as a separate file on disk. File geodatabases provide fast performance and can scale to very large file sizes (e.g., each dataset can be up to one terabyte in size).
Personal geodatabases are stored and managed using Microsoft Access. They are designed for a single user working with smaller datasets and are limited in size to 2GB for the entire geodatabase. Personal geodatabases are only supported on Microsoft Windows.
ArcSDE geodatabases manage spatial data within an RDBMS such as DB2, Informix, Oracle, SQL Server, PostgreSQL, and SQL Server Express. ArcSDE geodatabases support multiuser editing environment and can manage extremely large datasets. ArcSDE geodatabases also support version-based workflows such as geodatabase replication and archiving.
Organizations requiring the full suite of geodatabase functionality and a geodatabase with the capacity for extremely large, continuous GIS datasets that can be edited and accessed by many users should use an ArcSDE geodatabase.