What does the term "solera" refer to in Sherry and winemaking?

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Dear Dr. Vinny,
I have a question about Sherry and the term “solera.” Is that word used to describe the physical place where the wine is aged? Or is it the name of the process the wine goes through to become Sherry? Or is it both?
—John G., East Hampton, Conn.
Dear John,
A solera system is a collection of barrels, traditionally stacked (with the bottom row containing the oldest vintage), for the purpose of fractional blending across vintages. More on that in a moment. Solera systems are not specific to Sherry—they can be used on non-vintage bubbly, Port, rum and balsamic vinegar. Most Sherries go through the solera system, but it’s just one of the parts of the Sherry-making process. Check out our ABC’s of Sherry for more on how those wines are made.
And now back to fractional blending. It’s a way to create a house style, and to keep a historic thread running through a beverage that is made year after year. I find it helpful to picture a tower of barrels from multiple vintages, with the youngest barrels on the top of the pile and the oldest at the bottom. You start by removing some wine from the oldest barrel on the bottom, but then you replace that missing portion with wine from the next oldest barrel, and that portion is then replaced with the next oldest barrel, and so on down the line so that the missing amount is always replaced by the next-oldest available wine. Because you never entirely empty the barrels, the barrel on the bottom will always have at least a small amount of the oldest vintage.
—Dr. Vinny