There are a few main types of Z-Wave systems – Ones that actually have a local brain, and other that are tied to the cloud – where they do all their processing offline, then send back the data to the local “radio” to execute the command.
Smart Home Automation Controllers – This type of controller, such as the Vera systems as well as HomeSeer and a few select others. These devices have 99% of the brains in the local device, and use some cloud intelligence for remote access, email and sms relay and multi-user, plugin-updates, and firmware. These have a local Z-Wave Radio and vary with form factor and power use. The Vera3 for instance uses very little power, 12v or less as does the HomeSeer HomeTroller embedded system. Others like the HomeSeer software will run on a Windows machine.
Cloud Based Automation Controllers – This type of controller, such as the staples connect and others use a local Z-Wave Radio and some intelligence, but the majority of the processing is done in the cloud.