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If multiple cores/threads shouldn't be considered vertical scaling, what should?

Overclocking a single-core processor from 2.8Ghz to 4.2Ghz can only take you so far after all...

Yes, because it's still a single system image (one running OS with one process table).

'Scale up' vs 'scale out' are, to me, more intuitive terms for the same thing. Up/vertical are aligned, I guess

Usually it involves having an insane amount of ram and keeping the entire DB in ram.