The disadvantages

Because of the fact, that all started programs of all instances run on one PC (the server), the following problems might occus:

The server has to have sufficient computing power for all started programs.
The server has to have sufficient RAM for all started programs.
All interfaces have to be shared, e.g. network adapters, COM ports, parallel ports.
The network load gets accordingly high, as the data of the programs as well as the graphical data for the clients have to be sent via the network.
All started programs use the same file system and the same files. For Word e.g. this means, that the templates e.g. normal.dot are being written to by all started Word instances at the same time.