How does video get processed when sending via IP/ethernet?

Hi,

I lack knowledge here so I'm hoping some wiser heads can help me here: I want to know what parts of the computer system get used when sending video from one machine to another via IP over ethernet. Is it possible that the video can come in to the receiving machine, get processed, and then get sent out again over IP/ethernet? Would the processing take place in RAM, or graphics card, or even hard drive?

What is the most efficient way to send video to a machine that will implement a specific process and then spit it back out again?

Or, what is the question I should be asking??

Thanks,

Joe