Hi, GitLab PM for the Web IDE and Remote Development here! You're right, the Web IDE itself is running fully in the browser, but if you try to open a new Terminal panel you'll see that it can be configured to connect to a remote host. The setup (for now) requires a bit of manual config on your end but we're working on making that easier in the future!
This blog post gives a little more high level overview of the current functionality and where we're headed: https://about.gitlab.com/blog/2022/12/15/get-ready-for-new-g...
For a deeper dive you can check out our Remote Development [direction page](https://about.gitlab.com/direction/create/editor/remote_deve...) and [documentation](https://docs.gitlab.com/ee/user/project/remote_development/)