technically, real isn't on the server, all your doing is encoding a launch file. Its going to tell the real player how to play the stream in real player. Kinda like a widget that isn't.
take a look at the scripts after you generate it, and it will help you understand better.
It should be IP:port.ram if I remember right.
Streaming solutions offers a generator for this.
keep in mind that if you use their flash media player generator, you will need a media server, rather its commercial like adobe or wowza, or open source like red5
and if you use streaming solutions, their media server does support AAC+ V2 in flash.
Also loudcity offers a tutorial on understanding launch scripts better...