Okay, so you understand webfarms now. What's the magic that actually distributes the load, and how does it determine how the distribution is handled?
At ORCS Web we use the Foundry Server Iron products to perform our webfarm load-balancing. If one of them fails, the other instantly takes over (In our testing, it had sub-second fail-over!)
So what is this "Server Iron" thing? In simplest terms, it's a layer 4-7 switch. It has multiple network ports on it and can be used literally like other types of switches. But, it can also load-balancing and traffic distribution. A VIP (virtual IP) can be assigned to the SI (Server Iron) and it then handles all traffic sent to that address/VIP. Further configuration is done to tell the SI what to actually do with the traffic sent to the VIP address.
The traffic that hits the VIP on the Server Iron is of course redistributed to a number of server nodes so the client request can be satisfied - that's the whole point of a webfarm. If one or more server nodes are not responding, the switches are able to detect this and send all new requests to servers that are still online - making the failure of a server node almost transparent to the client.
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