Do VMs on host Server need physical connectivity to external shared storage (iSCSI)

Hi everyone.
In my lab setup I am using 4 Servers (S1, S2, S3 & S4) and external shared storage (hpe MSA 2040). Now I made S1 as my self-hosted engine and S2 is HA for my RHV-Manager running on S1. Remaining two servers (S3 and S4) are my additional hosts adding to S1 for spawning VMs.

Now my query is:
-> Do I need to connect (Physically) S3 and S4 servers to my shared storage? If 'yes' why?
-> If I spawn VMs on S3 and S4, where do these VM configuration data stored?

Thanks