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One of the quorum models for Failover Clustering is the ability to use a file share as a witness resource. The File Share Witness is designated a vote in the Cluster when needed and can act as a tie breaker in case there is ever a split between nodes.
There is a specific requirement that the witness should be joined to the domain and part of the same forest. And the reason is that it needs Kerberos to connect and authenticate with the share.