You are talking about a three-tier client-server based application system.
Think of it this way:
[client] ----\ _________
/ \
[client] ----( Internet )---[Application Server]---[Database Server]
\_________/
[client] ----/
1st tier 2nd tier 3rd tier
Application server hosts application that interacts with user while fetching data from the database server. e.g. you have an ERP system on the application, which takes request from the client via the browser, and process the data in the database server to generate query results.
Think about it. the interface runs on client computer, the logic runs on the application server and the data is stored on the database server.