ZFS uses the concept of storage pools to manage physical storage. Historically, file systems were constructed on top of a single physical device. To address multiple devices and provide for data redundancy, the concept of a volume manager was introduced to provide the image of a single device so that file systems would not have to be modified to take advantage of multiple devices. This design added another layer of complexity and ultimately prevented certain file system advances, because the file system had no control over the physical placement of data on the virtualized volumes.

ZFS eliminates the volume management altogether. Instead of forcing you to create virtualized volumes, ZFS aggregates devices into a storage pool. The storage pool describes the physical characteristics of the storage (device layout, data redundancy, and so on,) and acts as an arbitrary data store from which file systems can be created. File systems are no longer constrained to individual devices, allowing them to share space with all file systems in the pool. You no longer need to predetermine the size of a file system, as file systems grow automatically within the space allocated to the storage pool. When new storage is added, all file systems within the pool can immediately use the additional space without additional work. In many ways, the storage pool acts as a virtual memory system. When a memory DIMM is added to a system, the operating system doesn't force you to invoke some commands to configure the memory and assign it to individual processes. All processes on the system automatically use the additional memory.

ZFS is a transactional file system, which means that the file system state is always consistent on disk. Traditional file systems overwrite data in place, which means that if the machine loses power, for example, between the time a data block is allocated and when it is linked into a directory, the file system will be left in an inconsistent state. Historically, this problem was solved through the use of the fsck command. This command was responsible for going through and verifying file system state, making an attempt to repair any inconsistencies in the process. This problem caused great pain to administrators and was never guaranteed to fix all possible problems. More recently, file systems have introduced the concept of journaling. The journaling process records action in a separate journal, which can then be replayed safely if a system crash occurs. This process introduces unnecessary overhead, because the data needs to be written twice, and often results in a new set of problems, such as when the journal can't be replayed properly.

With a transactional file system, data is managed using copy on write semantics. Data is never overwritten, and any sequence of operations is either entirely committed or entirely ignored. This mechanism means that the file system can never be corrupted through accidental loss of power or a system crash. So, no need for a fsck equivalent exists. While the most recently written pieces of data might be lost, the file system itself will always be consistent. In addition, synchronous data (written using the O_DSYNC flag) is always guaranteed to be written before returning, so it is never lost.

With ZFS, all data and metadata is checksummed using a user-selectable algorithm. Traditional file systems that do provide checksumming have performed it on a per-block basis, out of necessity due to the volume management layer and traditional file system design. The traditional design means that certain failure modes, such as writing a complete block to an incorrect location, can result in properly checksummed data that is actually incorrect. ZFS checksums are stored in a way such that these failure modes are detected and can be recovered from gracefully. All checksumming and data recovery is done at the file system layer, and is transparent to applications.

In addition, ZFS provides for self-healing data. ZFS supports storage pools with varying levels of data redundancy, including mirroring and a variation on RAID-5. When a bad data block is detected, ZFS fetches the correct data from another replicated copy, and repairs the bad data, replacing it with the good copy.

ZFS has been designed from the ground up to be the most scalable file system, ever. The file system itself is 128-bit, allowing for 256 quadrillion zettabytes of storage. All metadata is allocated dynamically, so no need exists to pre-allocate inodes or otherwise limit the scalability of the file system when it is first created. All the algorithms have been written with scalability in mind. Directories can have up to 2⁴⁸ (256 trillion) entries, and no limit exists on the number of file systems or number of files that can be contained within a file system.

A snapshot is a read-only copy of a file system or volume. Snapshots can be created quickly and easily. Initially, snapshots consume no additional space within the pool.

As data within the active dataset changes, the snapshot consumes space by continuing to reference the old data. As a result, the snapshot prevents the data from being freed back to the pool.

Most importantly, ZFS provides a greatly simplified administration model. Through the use of hierarchical file system layout, property inheritance, and automanagement of mount points and NFS share semantics, ZFS makes it easy to create and manage file systems without needing multiple commands or editing configuration files. You can easily set quotas or reservations, turn compression on or off, or manage mount points for numerous file systems with a single command. Devices can be examined or repaired without having to understand a separate set of volume manager commands. You can take an unlimited number of instantaneous snapshots of file systems. You can backup and restore individual file systems.

ZFS manages file systems through a hierarchy that allows for this simplified management of properties such as quotas, reservations, compression, and mount points. In this model, file systems become the central point of control. File systems themselves are very cheap (equivalent to a new directory), so you are encouraged to create a file system for each user, project, workspace, and so on. This design allows you to define fine-grained management points.