A rack server is a type of server that is built specifically to be mounted into a server rack using screws or rails. Essentially, they are standalone computers, where all components (hard drives, networks cards etc) are contained within a case. They work by being plugged into a standard power outlet and connecting the network cables. You can tell how powerful the server is by the size of it; it has more space for more components. The size of the rack is dependent of the requirements of the system. For example, larger servers allow for additional CPUs and memory etc. The individual servers are placed one on top of the other in the rack to help minimise the space used.
Blade servers are commonly used in high density computer environments, such as large data centres. The system consists of a main large chassis with many blade servers inside it. The blade servers themselves are physically very thin, meaning more servers can be housed in a small area. The blade is effectively a system motherboard and can run its own system. However, if required, you can use system software to integrate them into a server cluster, by connecting all blades to a high-speed network. The actual blades themselves only have CPUs, memory, integrated network controllers and sometimes storage built in. The chassis stores the blades. It provides the power and manages the network. This allows each of the blades to operate more efficiently.
In all honesty, it completely depends on the situation you are in. They can both be configured to do the same work, so it is dependent on your other requirements. For example, how much space you have and your budget.
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