The folks over at Ars Technica have posted an extensive article detailing the steps how to offload your iTunes library to network attached storage. For those of you who are visual learners and just want a quick overview, cnet also posts a three minute video tutorial describing the process.
Even if you're not interested in moving your library off your main drive, the infomration provided at both these links offer good information about how the iTunes library folder is managed and works.
For my setup, I have my entire iTunes library, including a large collection of home movies and video podcasts on my Drobo FS. I keep a smaller set primarily of music and audio podcasts on my MacBook Air. The main iTunes library is managed through my Mac mini which runs 24/7 and keeps iTunes launched in the background meaning I always have access to the content on my Apple TVs. Adding iTunes match to the equation means I have access to all my music all the time.
One thing to note, if you don't have access to a large NAS or a home server, you can move some of your library off your internal hard drive to save space. Before my current setup, I stored video files on an external hard drive that was direct attached to my Mac and then dragged those videos into iTunes to associate them with my library without copying the files to the library. (You have to make sure for this the option to copy files to your iTunes folder is not checked.) The videos were linked to my iTunes Library, but actually lived on the external drive and the drive had to be powered on mounted for the content to be available. Another step, but saved precious hard drive space at a time when I didn't have the resources for a more elaborate setup.