Listen Server vs. Dedicated Server
When launching a multiplayer game, there are two methods in which the game can be hosted. The first, is by using a Listen Server (default setting) which means that the machine that has the authority is also running a client and can play the game normally while hosting for other players.
The second method is by using a Dedicated Server, which as the name implies, is dedicated to only hosting the game and no local players play on the machine as everyone connected is a client. Usually running as a Dedicated Server is more optimized than running as a Listen Server as there are no visuals or input being registered.
By default, the server type is set to a Listen Server when playing in the editor or standalone game.
To run a Dedicated Server: