Background

Your iPhone stores the personal (and business) information in the "Contacts" app.

(For clarity, we will call this "Contacts.app".)

What is a "unified contact"

Contacts.app will attempt to identify people that appear in multiple stores, and display them as a single contact.

Most contacts come from another source in the cloud, like iCloud's Contacts or Gmail's Contacts.

Contacts.app makes a local copy of each contact, so that you can use the information when you are offline.