This is the smaller version of the Cisco Call Manager.
The music on hold source will generally be the corporate server (Call Manager). The audio is streamed to each individual location. Audio usually starts from the beginning for each caller, this is called Unicasting.
Depending on how the router is populated, you may be able to accommodate an external player as the music on hold source. This is sometimes possible with and E & M card with a RJ11 or RJ45 connection on the router.