Forms & Report Server as the name suggest are servers, one serves forms and the other reports. What this means is that instead of using traditional client/server architecture with the use of these two servers you can deploy multi-tier architecture Forms & Reports, what this achieves is light clients on PCs, you simply need IE or netscape as clients and instead of having Forms & Report runtime the forms & reports server will send some Java applet to your light client. Now this part I am not sure but I think all runtime processes are run now in the Forms & Reports server instead of client servers.
I believe you need Developer 6i to use this.