Single Server topology
In a single server installation all of the portal components such as portal server, WCM, Portal Search are installed on same machine. You can also install Database on LDAP on same machine or use the Database and LDAP that installed on remote machine.
This is a good option when you want to install Proof of concept environment.
Vertical cluster is when you have more than one instance of WebSphere Portal server running on the same machine. In this case multiple java processes would be running on that machine.
You can use vertical scaling to fully use a node within the conceptual node group in the case where resource congestion or locking conditions prevent a single application instance to scale up to the nodes limit.
In a horizontal scaling topology members of a WebSphere Portal cluster exists on multiple physical machines
Clustering is a most effective in environments that use horizontal scaling because of the ability to build in redundany and failover to easily add new horizontal cluster members to increase capacity and to improve scalability by adding hertogeneous systems into cluster.
Mixed horizontal and vertical scaling topology
Mixed horizontal and vertical scaling topology is the best practice approach for large scale deployments. The use of vertical clustering takes full advantage of the resources of a multiprocessor systems. In addition horizontal cloning allows for upward scalability.