Horizontal scalability would mean that you can simply add more application JVMs and/or Terracotta Server JVMs on commodity boxes and the application responds in that you get more scalability (measured as TPS). This typically involves load-balancing and clustering technologies such as Terracotta.
Vertical Scalability would mean that you scale up a given resource by investing in a more powerful machine and software footprint. e.g. moving from a 4 core machine to a 16 core machine or upgrading RAM from 8G to 64G to run your RDBMS.