[adamius]

The only way I understand it and stay sane is to say that "the X server serves out access to a display surface which clients like xterm connect to in order to show what they need to show". The X server runs on my machine since that is the display being shared and my programs need a connection to that display.

That's the pragmatic explanation I use.

Otherwise, and especially if you think servers are somehow always somewhere out there, you'll get a rude counter example. Server just means provider of service and thats about it. You're tripping up on your own assumption.

This is why you can telnet/ssh to a server out there, set the display variable to point back to your machine and xterm will try and connect to your machine. Its wanting a connection to your display to show things and to do so it needs a display server, ie yours.

That all probably made sense.