Standalone deployment: Controller can be configured to perform firewall management, processing and storing reporting and analytics data. NSM provide flexibility to extend standalone deployment to multi-node deployment.
Multi-node deployment: NSM On-Premises provide flexibility to deploy it in multi-node setup. In this deployment, controller node is associated with one or more reporting agents.
Controller and Reporting Agents can be added as deployment nodes.
The distributed setup is needed when you have multiple firewalls. In this case, Controller is used to manage all the firewalls but the reporting agent will be assigned to each firewall to store the reporting data.