Tom's right. Plus, they gather data from state motor vehicle departments, so such things as salvage titles, branded titles, rebuilder titles, flood damage totals, VIN switches, gray market vehicles, odometer rollbacks, odometer discrepancies, etc., show up on CarFax.
But as Tom pointed out, it's not totally reliable on older vehicles, especially those manufactured before 17-digit VINs. All in all, however, it's far more help and far more reliable than nothing.