I am not sure I fully understand what you are asking but I will give your questions a try.
The system is such that it consists of a server and a client. Commonly these can all be running on the same system but they can also run on separate computers. The server is the system the database and its server will be located on (as well as the web server) and any other system can then access that web server (subject to whatever firewall etc limits there are).
As an example I have set up a system on a slicehost server which can host as many as 20 or more databases. In this system I use Ubuntu server as the server os and I use Apache configured with passenger to provide as many separate systems as I want. Each virtual host (an Apache concept) has a distinct hostname which corresponds to the server for that campground. In this type of configuration the use of the login capability is manditory.