The code in AX can run on either the client or the server. The server here will be the Application Object Server (AOS). There are two ways of controlling where objects of a certain class should execute. When developing static methods you can select to use the client or server modifier in the method header like in the example:
// This method will execute on the client.
static client void clientMethod()
// This method will execute on the server.
static server void serverMethod()
You can also set the RunOn property on a certain class to make all objects of that class run on either the client or the server. You can also set the RunOn property on the class to CalledFrom. This will make objects of that class execute on the same layer as the method that created the object.