How does modlet/mod packs work for multiplayer?

[ZeeDic]

I'm confused on how mod will affect multiplayer, I want to add ZombieDayz so my friends can I play on my world, do i need client or server? I have done some digging and you can have dedicated server that required you to do tons of crap to set up, how is that different from the "Continue game" server where your friend can join via Steam?
Idk if that make sense but if I install the Zombiedayz server mod will that work on the "Continue game" server and none of my friend need to download said mod or do they have to all have mod packs?

[Shurenai]

Alright so, In most cases, Mods will proliferate across the connection when the client downloads the server's copy of .xml files.

However, Certain things are not. Namely, Any mod that adds a new model, the client would need the mod installed. Any mod that adds new textures, the client would need the mod installed.

Basically, Any mod that adds anything new outside of .xml coding will likely require the client to also install the mod themselves, or there'll be issues like missing textures, icons, ui elements out of place or missing, invisible enemies in cases where the mod adds it's own zombie models/textures, etc.

When in doubt, Have them install it too.