There are two components to designing a database: logical and physical. Logical database design involves modeling your business requirements and data using database components such as tables and constraints without regard for how or where the data will be physically stored. Physical database design involves mapping the logical design onto physical media, taking advantage of the hardware and software features available that allow the data to be physically accessed and maintained as quickly as possible, and indexing.
It is important to correctly design the database to model your business requirements and to take advantage of hardware and software features early in the development cycle of a database application because it is difficult to make changes to these components later.