The X Window system (commonly known as X11) came in 1984, originating at the Massachusetts Institute of Technology (MIT). It was a graphical user interface system. With it came a network protocol to enable networked computers to connect to servers in a similar fashion as the terminals of the '70s, but, with its graphical capabilities, it was a big step up from the text-based terminal.
As with the terminal solution, the users' input was to be sent to a server, and the software the user used would, in fact, run on that very server. The result in the graphical user interface would then be sent back to the client machine, as represented in the following figure, again leaving the client to be rather dumb and passive: