MS DTC Architecture
In general, each Microsoft SQL Server that you want to be included in your high availability distributed transaction topology must have an associated distributed transaction coordinator (MS DTC).
As has been explained, it is MS DTC that allows your applications to extend transactions across two or more instances of MS SQL Server (and participate in transactions managed by transaction managers that comply with the X/Open DTP XA standard). Think of MS DTC as the primary coordinator for these distributed transactions. MS DTC enlists (includes) and coordinates all SQL Servers (linked servers) that are part of a single distributed transaction as is shown in Figure 8.2
SQL Server will automatically promote a local transaction to ...