Once upon a time there was a data center filled with racks of physical servers. Thanks to hypervisors such as VMware ESX it was possible to virtualize these systems and run them as virtual machines, using less hardware. This had a lot of advantages in terms of compute efficiency, ease of management and deployment/DR agility.
To enable many of the hypervisor features such as VMotion, HA and DRS, the data of the virtual machine had to be located on a shared storage system. This had an extra benefit: it’s easier to hand out pieces of a big pool of shared storage, than to predict capacity requirements for 100’s of individual servers. Some servers might need a lot of capacity (file servers), some might need just enough for an OS and maybe a web server application. This meant that the move to centralized storage was also beneficial from a capacity allocation perspective.