Server side GTM is a new product that sends and processes tracking events to servers hosted on user owned domains rather than Google’s.
Traditionally, tracking information from tags is sent directly from the user’s browser to each of the platforms configured in a GTM container. While this type of implementation is cheap and easy to implement, it does have limitations.
This is where server side tagging comes into play. Each time a tag is fired, it is sent to a single container hosted on your domain. It’s here that the data from the tag is processed and sent to the appropriate platforms. While implementing server side tagging is typically more expensive and requires more technical expertise than regular GTM practises, it helps improve site performance, allows more cookie functionality due to first party context and gives greater control over data being sent to various tracking platforms.