It usually come on a CD and install completely on your computer. The code that runs these applications resides on your desktop. It is usually pretty fast, has great user interfaces and is incredibly dynamic.
It runs on a Web server and you access the application with your Web browser It provides services you could never get on your desktop (think about Amazon.com and eBay). waiting for a server to respond, waiting for a screen to refresh,
waiting for a request to come back and generate a new page.