http://lonesysadmin.net has a blog post titled VMware Fault Tolerance = RAID 1
Fault Tolerance is to VMs what RAID 1 is for data. Whatever happens on disk 0 happens on disk 1. So if you delete a bunch of files they disappear from both disks, and you still need to restore from backup. You only see benefits if one of the drives dies. Fault Tolerance keeps two VMs in sync that same way
Interesting, so think of Fault Tolerance as protection from a hardware fault.