Data follows the VM, so if a VM is moved to another server/node, when data is read that data is copied to the node where the VM resides. During normal operating conditions all reads come from local flash (SSD/NVMe). New/changed data is always written locally and to one or more remote locations for protection.
Whether data locality is a good or a bad thing has turned into a philosophical debate. Its true that data locality can prevent a lot of network traffic between nodes, because the data is physically located at the same node where the VM resides. However, in dynamic environments where VMs move to different hosts on a frequent basis, data locality in most cases requires a lot of data to be copied between nodes in order to maintain the physical VM-data relationship. The SDS/HCI vendors today that choose not to use data locality, advocate that the additional network latency is negligible.