If I understand this correctly then it will vary from package to package, but...

You either need to have all of your audio files and plugins on each computer (and therefore each needs a fast hard drive) or you need a fast network and it streams the data as needed.

you will need at least one other mac linked via network cable or firewire which has the logic node application installed and running. pc's don't work because logic node is mac only.
you don't need the audiofiles or plugins on the other system.
you then can select in your arrangement window which tracks you want to use with the node (you have to activate the node button in the track header). 3rd-party plugins can use node only in logic 8. logic 7 can only send logic plugs to the node.
you don't have any control over when and how the node is used.

i have tried this with my macbook pro as a master and a mac mini g4 as the node. i didn't notice any inprovement so i use the mini as a media center now...

Actually, there was an excellent article a few years back in Mix magazine about doing just so!

It's mostly a throwback feature for PPC machines.

With the newer MacIntels I haven't needed to node.

I originally picked up a core duo mini as a node for my Powerbook, ended up using the mini as my primary DAW, have yet to max out the CPU.

8)