Target system would have the FPGA device installed. The host system would be a normal development system or workstation that does not have the FPGA installed, but used to develop FPGA payload with Quartus to run on the target system. Reason asked? Which system do we request the license for?
If you are talking about getting a fixed node license, get it for the development system. If you have a different machine to connect to the FPGA, you can use the free Programmer/Signal Tap download to connect to the device and debug in hardware without needing a Quartus license.