So here is a quick FAQ
(I’m going to give you the answers straight from Wikipedia)
What is Fax?
Fax (short for facsimile), sometimes called telecopying, is the telephonic transmission of scanned printed material (both text and images), normally to a telephone number connected to a printer or other output device. The original document is scanned with a fax machine, which processes the contents (text or images) as a single fixed graphic image, converting it into a bitmap, the information is then transmitted as electrical signals through the telephone system. The receiving fax machine reconverts the coded image, printing a paper copy.
Although businesses usually maintain some kind of fax capability, the technology has faced increasing competition from Internet-based alternatives. However, fax machines still retain some advantages, particularly in the transmission of sensitive material which, if sent over the Internet unencrypted, may be vulnerable to interception, without the need for telephone tapping. In some countries, because electronic signatures on contracts are not recognized by law while faxed contracts with copies of signatures are, fax machines enjoy continuing support in business.
In many corporate environments, standalone fax machines have been replaced by “fax servers” and other computerized systems capable of receiving and storing incoming faxes electronically, and then routing them to users on paper or via an email (which may be secured). Such systems have the advantage of reducing costs by eliminating unnecessary printouts and reducing the number of inbound analog phone lines needed by an office.
What is a Fax Server?
A fax server (or faxserver) is a system installed in a local area network (LAN) server that allows computer users whose computers are attached to the LAN to send and receive fax messages.
Alternatively the term fax server is sometimes used to describe a program that enables a computer to send and receive fax messages, set of software running on a server computer which is equipped with one or more fax-capable modems(or dedicated fax boards) attached to telephone lines or, more recently, software modem emulators which use T.38 (“Fax over IP”) technology to transmit the signal over an IP network. Its function is to accept documents from users, convert them into faxes, and transmit them, as well as to receive fax calls and either store the incoming documents or pass them on to users. Users may communicate with the server in several ways, through either a local network or the Internet. In a big organization with heavy fax traffic, the computer hosting the fax server may be dedicated to that function, in which case the computer itself may also be known as a fax server.