"The master cylinder is a hydraulic control device that converts physical pressure (commonly from a driver's foot) into hydraulic pressure to operate other device(s) in the hydraulic system. The most common automotive uses of master cylinders are in brake and clutch systems. The operated device in the clutch system is called the slave cylinder. In brake systems, the operated devices are brake calipers and/or wheel cylinders."
Source and further information:
http://en.wikipedia.org/wiki/Master_cylinder

Further information:
http://en.wikipedia.org/wiki/Brake
http://en.wikipedia.org/wiki/Clutch

The brake system has a master cylinder that is usually mounted on the firewall and has a fluid resevoir, you push on the brake pedal and the master cylinder applies fluid pressure to the brakes through a proportioning valve and or an ABS controller. A hydraulic clutch system also has a master cylinder.

If I am not mistaken, I believe the master cylinder holds the brake fluid.