After an app is downloaded, it resides under $SPLUNK_HOME/etc/apps on the deployment clients. But it resided in the $SPLUNK_HOME/etc/deployment-apps location in the deployment server.

Adding further clarity and quoting same Splunk reference URL from @giubal"
"To keep configuration settings consistent across peer nodes, configuration files are managed from the cluster master, which pushes the files to the slave-app directories on the peer nodes. Files in the slave-app directories have the highest precedence in a cluster peer's configuration. Here is the expanded precedence order for cluster peers:
1.Slave-app local directories -- highest priority
2. System local directory
3. App local directories
4. Slave-app default directories
5. App default directories
6. System default directory --lowest priority