It is a link to a server-based application/library and user folder. The idea is that it's the same as the computer icon, only across the network. In other words, a mapped network drive (as opposed to the temporary login to AFP/SMB servers, this one is a fixed address).
It's how we use our win2k network here at work, except we have the "P-Drive," the "S-Drive" and so on which are hard links to server domains. I can still go to someone else's local D-drive in the network neighborhood (something OS X needs like the old Network browser in OS9) but the link is dropped when I reboot (i.e., not mapped).
I imagine that OS X Server allows this to happen in the Network icon.
[ 12-08-2001: Message edited by: BuonRotto ]</p>