I like to think about Terracottas DSO in terms of advanced parallel architectures: Terracotta turns your message-passing multicomputer into a usual unified memory multiprocessor. Multicomputers are different from multiprocessors in that processors share memory and, therefore, are easier to program because you just write into memory in usual multithreading way. Though, you it means that you need to explicitly synchronize access to the shared data using a lock, system saves you from the need to explicitly message-passing data marshaling and resolves the biggest parallel programming issue -- the cache coherence -- for you. Multiprocessor marshals the data for you when you take/release the lock. It is, therefore, desirable. But, initially you have a bunch of computers -- a multicomputer.
The magic is achieved by injecting some code into your classes at object field/lock access points. To correspond DB world, Terracotta considers all updates done under a lock atomic (transaction). Likewise multiprocessors can have a global storage, Terracotta allows to back up the locally updated data to disk.