NAS hardware is similar to the traditional file server equipped with direct attached storage. However it differs considerably on the software side. The operating system and other software on the NAS unit provides only the functionality of data storage, data access and the management of these functionalities. Use of NAS devices for other purposes (like scientific computations or running database engine) is strongly discouraged. Many vendors also purposely make it hard to develop or install any third-party software on their NAS device by using closed source operating systems and protocol implementations. In other words, NAS devices are server appliances.
NAS units also usually have a web interface as opposed to monitor/keyboard/mouse.
Often minimal-functionality or stripped-down operating systems are used on NAS devices. For example FreeNAS, which is open source NAS software meant to be deployed on standard computer hardware, is in fact a "leaned-out" version of FreeBSD.
NAS systems usually contain one or more hard disks, often arranged into logical, redundant storage containers or RAIDs (redundant arrays of independent disks), as do traditional file servers. NAS removes the responsibility of file serving from other servers on the network.
NAS uses file-based protocols such as NFS (popular on UNIX systems) or SMB (Server Message Block) (used with MS Windows systems). NAS units rarely limit clients to only one protocol.
NAS provides both storage and filesystem. This is often contrasted with SAN (Storage Area Network), which provides only block-based storage and leaves filesystem concerns on the "client" side. SAN protocols are SCSI, Fibre Channel, iSCSI, ATA over Ethernet, or HyperSCSI.
The boundaries between NAS and SAN systems are also starting to overlap, with some products making the obvious next evolution and offering both file level protocols (NAS) and block level protocols (SAN) from the same system. However a SAN device is usually served through NAS as one large flat file, not as a filesystem per se. An example of this is Openfiler, a free product running on Linux.