EagleRalph,
Where UBE's and Business Functions run depends on the OCM mapping. It may depend also on the UBE properties and whether or not where the UBE runs is overridden when when submitting the UBE.
If your system only has one enterprise/application server and the UBE and Business Function OCM mapping is to the default and there are no overrides in the UBE properties or when submitting the UBE then both the UBE and the Business Function will run on the enterprise/application server. Under the circumstances just described, if the UBE is a Table Conversion, then by default it will look in the import directory in the pathcode directory in the install directory on the enterprise/application server.
In sumary, if all mappings are default, with no overrides, on a single enterprise/application server system, yes, E1 business functions run on the same server that E1 uses as a default to look for flat files that are input to Table Conversion programs.