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Every Joomla! installation requires a database. The database is used to store all the CMS's content(articles, categories, menus, etc.) Simply put, the content of the website being created with Joomla! is held entirely in the database. Only media(images, videos, sounds) is kept in a file format in the directory structure.
The database will be created automatically when you use a One-click installer which are sometimes provided by hosting companies. If you are installing Joomla! manually, you will need to create a database before you begin installation. See the article, Unable to connect to the database for troubleshooting connection problems pre or post installation.