Distributed Data Processing: In this method the computing-processing ability is distributed across different locations by multiple computers. This is in contrast to a system where one server manages all other connected systems. One example is the use of Remote Procedure Call (RPC), this is a procedure that will execute another address space on another computer on the network.
Centralized Data Processing: This is when processing is performed on one computer or in a cluster of computers in a single location. This is the process when one server manages all other services on the network. This involves the use of what are known as “dumb terminals”, which sends or receives input and output only; all processing is done on the central computer.