This seems more like a Dreamweaver question than an XML question. But I'll do my best...
XSL transformations can be done either on the server side or the client side. I have used PHP's XSL processing classes before, but I typically let the client's browser handle the XSL processing. If you haven't explicitly written any server side code, I assume Dreamweaver will simply publish the XML and XSL files. These will then be converted into HTML by each user's browser.