How To Manage Client Access

I'm setting up OSX Lion Server (for the first time), and everything is fine, but I'm confused about physical storage.

I want to set group access to certain files, applications, etc, but is all that data stored only on the server? Is there even a way to control applications, or must those be installed locally on client computers?

Also, is there a way to force the client computer to always require a login to the server (i.e. no local access)?

Just FYI: The client computers are stationary iMacs connected through Ethernet.

Thanks!

Also, is there a way to give clients a set amount of personal server storage?