Where does the Abap program run?

All ABAP programs reside inside the SAP database. They are not stored in separate external files like Java or C++ programs. In the database all ABAP code exists in two forms: source code, which can be viewed and edited with the ABAP Workbench tools, and generated code, a binary representation somewhat comparable with Java bytecode. ABAP programs execute under the control of the runtime system, which is part of the SAP kernel. The runtime system is responsible for processing ABAP statements, controlling the flow logic of screens and responding to events (such as a user clicking on a screen button). A key component of the ABAP runtime system is the Database Interface, which turns database-independent ABAP statements ("Open SQL") into statements understood by the underlying DBMS ("Native SQL"). The database interface handles all the communication with the relational database on behalf of ABAP programs; it also contains extra features such as buffering of frequently accessed data in the local memory of the application server.
SAP has three different layers as presentation layer (GUI), application layer (programs run on this) and data base layer where all data is stored and retrieved from user driven conditions,commands given by end user programmer through presentation layer.