In some cases, you might not want to use a network. It often happens that a database will only talk to a local application anyway. Maybe your PostgreSQL database has been shipped along with your application, or maybe you just don't want the risk of using a network: in this case, Unix sockets are what you need. Unix sockets are a network-free means of communication. Your application can connect through a Unix socket locally without exposing anything to the outside world.
What you need, however, is a directory. By default, PostgreSQL will use the /tmp directory. However, if more than one database server is running per machine, each one will need a separate data directory to live in.
Apart from security, there are ...