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FTP is File Transfer Protocol, used since early 1990s for transferring files between computers located remotely. FTP can handle transfer of multiple files, as well as very large files.
A file server hosts many files for a set of users, with appropriate access restrictions.
Usually file servers are located within an enterprise, accessible only from inside an organization's firewall. Users can also use VPN to log into the internal network from their homes and hotel rooms, and then access the files.
For users external to an enterprise, like partners and customers, file server access via the internal network is not possible. The files could be software patches, update releases or CAD drawings. In such cases, the enterprises host an FTP server which can be accessed, usually, via the Internet. The partners and customers use an FTP program, like cuteftp, to download the required files. The FTP servers would be secured from Internet attacks and password protected.
There are also scenarios for using internal FTP. Devices like routers and computers take their bios and OS updates from internal FTP servers. They also backup their configurations to FTP servers. So, an internal IT infrastructure would have a few FTP servers for this purpose.
FTP is also used internally to transfer large files or transfer many files between servers — for example, moving files from production to development.
What is the difference between a file server and a terminal server?
A terminal server provides remote access to a computer, usually via serial or RS-232 protocol. A file server hosts files for users to store and access.