The Microsoft SQL Server 2008 database management system (DBMS) includes two spatial storage types: geometry and geography.
The geometry type is used to store data that uses projected spatial reference systems to define spatial data. The geometry type would be used for data for which distortions introduced by the curvature of the earth are not a concern.
The geography type is used to store geodetic spatial data. Geodetic spatial data uses latitude and longitude coordinates. This type would be used if your data needs to reflect the curvature of the surface of the earth.
ArcSDE supports both the geometry and geography types for feature class geometry storage. Feature classes in an ArcSDE geodatabase that use the Microsoft geometry storage have a column of type geometry in the business table. Feature classes that use the Microsoft geography storage have a column of type geography in the business table.
Both storage types use the Microsoft spatial index.
See Using the Microsoft spatial types.
Consult the Microsoft SQL Server documentation for further information on its spatial storage types and spatial index.