What are named pipes?
Both on Windows and POSIX systems, named-pipes provide a way for inter-process communication to occur among processes running on the same machine. What named pipes give you is a way to send your data without having the performance penalty of involving the network stack.
Just like you have a server listening to a IP address/port for incoming requests, a server can also set up a named pipe which can listen for requests. In either cases, the client process (or the DB access library) must know the specific address (or pipe name) to send the request. Often, a commonly used standard default exists (much like port 80 for HTTP, SQL server uses port 1433 in TCP/IP; \\.\pipe\sql\query for a named pipe).
By setting up additional named pipes, you can have multiple DB servers running, each with its own request listeners.
The advantage of named pipes is that it is usually much faster, and frees up network stack resources.
-- BTW, in the Windows world, you can also have named pipes to remote machines -- but in that case, the named pipe is transported over TCP/IP, so you will lose performance. Use named pipes for local machine communication.
Unix and Windows both have things called "Named pipes", but they behave differently. On Unix, a named pipe is a one-way street which typically has just one reader and one writer - the writer writes, and the reader reads, you get it?
On Windows, the thing called a "Named pipe" is an IPC object more like a TCP socket - things can flow both ways and there is some metadata (You can obtain the credentials of the thing on the other end etc).
Unix named pipes appear as a special file in the filesystem and can be accessed with normal file IO commands including the shell. Windows ones don't, and need to be opened with a special system call (after which they behave mostly like a normal win32 handle).
Even more confusing, Unix has something called a "Unix socket" or AF_UNIX socket, which works more like (but not completely like) a win32 "named pipe", being bidirectional.