Replication is between the SEPM's. THe DB caoul be anything ( embedded or SQL).

The below information is from Mithun's writeup

https://www-secure.symantec.com/connect/forums/difference-between-replication-and-failover

Replication:

Replication configurations are supported with both embedded and Microsoft SQL Server databases. Replication configurations are used for redundancy. Data from one database is replicated (duplicated) on another database. If one database fails, you can still manage and control all clients because the other database contains the client information.

Installing and configuring servers for replication is a two-part process. In an existing installation site, you first install a new Symantec Endpoint Protection Manager and database for replication with an existing manager. Second, you log on to the Symantec Endpoint Protection Manager and select and schedule the items to replicate.

When you select the items to replicate, you can choose logs and packages. Packages also include the updates to virus definitions, client components, and client software. The size of packages and updates can grow to several gigabytes of information if you download updates in multiple languages. You must consider the amount of data you replicate when you select these options, along with the bandwidth consumption. One client package is generally 180 MB in size when compressed.

You can install and configure both the embedded database server and Microsoft SQL Server for replication. Replication configuration causes data to be duplicated between databases so that both databases contain the same information, preferably on different database servers on different computers. If one database server crashes, you can continue to manage the entire site by using the information on the database server that did not crash.

Note: 
Symantec Endpoint Protection Manager configures and controls this replication. This replication is not native SQL Server replication.

For more information you can check these links

REPLICATION

1) About installing and configuring Symantec Endpoint Protection Manager for replication

http://www.symantec.com/docs/HOWTO26797

Replication Concepts and Configuration

https://www-secure.symantec.com/connect/videos/replication-concepts-and-configuration