In Next.js, server components are special components that run only on the server. When you write a server component, Next.js detects it during build and excludes its code from the JavaScript sent to the browser. Instead, the server runs the component code, generates HTML, and sends that HTML to the client. The client then displays this HTML directly without needing any JavaScript for that component. This process means the client bundle size for server components is zero, improving load speed and performance. The execution table shows each step: reading the component, excluding it from the client bundle, rendering HTML on the server, sending HTML to the client, and rendering it in the browser. The variable tracker confirms the server component code never reaches the client, only the HTML does. This approach helps keep client bundles small even if server components are complex.