I could elaborate on this image forever. I've used this PPT smart art as an illustration in my decks recently. The SharePoint Dummies book on the cover has a similar example. I find it helpful to break this down to the level you're working at, but seeing it all at once can be helpful. I use it to show what farms are, or to explain what a web app is, or to show the emphasis on the site collection as the atomic unit.
The other thing that you'll find that's interesting, is outside of SSPs which apply to SharePoint Server, Project Server, and other services and servers installed on WSS, the hierarchy is consistent. That's very powerful.
