Scoping out Sharepoint - Is it possible to run web apps in the same domain as a web page? (ie not with references to a cloud)

From what I understand, with sharepoint it is possible to run web apps on the server that don't need to be referenced via the cloud, ie in contrast to SkyDrive.

If so, would it be possible to create a web site on the share point server that embeds say a word web app in a page, all done in the one server, on the same domain?

Thanks