a Fanout is a way for SPECTRUM to model a "Many-To-One" connection on a switch port.... What it really represents is multiple different MAC addresses discovered on a switch port for modeled devices in the SPECTRUM landscape. So if you had a hub for example connected to a switch, and then multiple devices modeled in SPECTRUM connected to the hub - SPECTRUM would resolve the topology as SWITCH --> FANOUT --> Multiple Modeled Devices (where FANOUT represents the Hub in this case). Likewise in the case of VM environments.... the fanout can represent the trunked vSwitch coming into the network switch (as several MAC addresses for the VM will appear to the switch port).
A fanout can also appear when you accidentally forget to model a switch sitting in between modeled devices and an upstream switch. In this case the trunk port will have multiple MAC addresses appearing on it but SPECTRUM does not know about the downstream switch so it would model a fanout connector then connect all the modeled devices for who's MAC addresses it found to the fanout connector.
Just remember that at the heart of the model so to speak, is SPECTRUM representing multiple MAC addresses found on a single switch port.