In Microsoft SQL Server, there are two primary types of indexes: clustered and non-clustered. A clustered index organizes the actual physical order of data in a table based on a chosen column, typically the primary key. However, each table can have only one clustered index. Clustered indexes are best suited for operations like sorting and range-based queries since they determine the physical data order. On the other hand, non-clustered indexes are separate structures that contain a copy of indexed columns along with pointers to the corresponding rows in the table. Tables can have multiple non-clustered indexes, and they are particularly useful for speeding up queries that involve specific columns or combinations of columns, enhancing query performance and efficiency.