Networked client-server applications (newbie)

Hello everyone,
(Apologies if this post is irrelevant for this particular forum :)
As I understand peer-to-peer networks, separate instances of application software are installed on 'each' computer, and files are then shared by everyone logged on. My query regards client-server networks (i.e. a centralized server with less powerful client computers attached to it): Would someone please explain (and possibly point to additional resources) how applications are installed on these networks? In particular, is it true that there's only one instance of application software (e.g. MS Word) installed on the central server, and that this is then somehow shared by all the connected users? ... and if not, is it possible to have such an arrangement, so that when it comes to upgrading any application software, the update only happens at one location (instead of on each client machine)? Thanks very much for your time.

Guy: Thanks so very much :)
I see now. I was specifically wondering about networks involving WinNT / 'Win 2000 Server' as the 'central' server OS, but think that these would involve heavier clients than the mainframe example.
I assume that in a Win NT client-server network, if a client wanted to run a program (e.g. MS Word), the Win NT OS would transfer a 'copy' of the MS Word executable to the client machine where it would run and consume the resources of the client. Win NT would do this again for any other client, and so ultimately there would only be one 'stored' copy of MS Word. Also, given copies of executables are transefered, resources of the clients are used up, resulting in medium 'weight' clients with relatively less central server load.
It'd be great if you could verify this assumption,
Regards, SP.

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