There are lots of different approaches for this task. Some may use an (SQL) database, others flat files. Cacti uses RRDTool to store data.
RRD is the acronym for Round Robin Database. RRD is a system to store and display time-series data (i.e. network bandwidth, machine-room temperature, server load average). It stores the data in a very compact way that will not expand over time, and it can create beautiful graphs. This keeps storage requirements at bay.
Likewise, rrdtool will perform some specific tasks. It performs consolidation to combine raw data (a primary data point in rrdtool lingo) to consolidated data (a consolidated data point). This way, historical data is compressed to save space. rrdtool knows different consolidation functions: AVERAGE, MAXIMUM, MINIMUM and LAST.