WinFS is not a physical file system; it is built on top of NTFS, and NTFS will remain as the default file system.
WinFS is based on SQL Server and its core feature is to provide a data relations mechanism. This means that your pictures are related to dates, events, and persons and so on. This allows you to perform a search such as "All pictures of Joe taken the last month".
This query is not possible for a traditional file system such as NTFS, but will be a trivial part of WinFS. In reality, WinFS stores are simply SQL Server database files (.mdf files) with the FILESTREAM feature enabled.
These files are stored in secured folder named "System Volume Information" placed into the volume root, in folders under the folder "WinFS" with names of GUIDs of these stores.