Linux Terminal Server Project (LTSP) provides tools to allow Linux servers to function in the same way as Citrix XenApp and Microsoft's Remote Desktop Service, by presenting applications remotely to multiple users with users experiencing the same look and feel as if they had connected to Linux applications locally.
The LTSP is an open source and provide an add-on for Linux, allowing many variants of Linux to provide application hosting and remote presentation functionality.
Just as other forms of application hosting and remote presentation, the applications themselves run on a central server, which in this case is Linux with a terminal handling, that is the user's device handling the input and output, relaying key strokes and mouse movements and processing screen updates.