"Dedicated Servers Updated 24.08.00
Dedicated servers are the most common type of servers that people join. Running a dedicated server has a distinct advantage for the people playing the game itself in comparison to connecting to a listen server. A dedicated server does not have to display any 3D graphics , so its CPU can concentrate on delivering a smooth multiplayer gaming experience.
As noted in the introduction to this guide, you need to remember that when you have a machine running a dedicated server, it is highly unfavorable that someone then fire up Quake 3 on the same machine, and join the dedicated server. You are essentially running two instances of Quake 3 on that computer now, and this will tax the processor(s) heavily. This causes all sorts of strange behavior to rear its ugly head. People that were playing on the server will notice their pings suddenly soar, and depending on how many people are playing and how much horsepower the host machine has, people may start to experience the dreaded phone-jack-icon sightings. Sometimes the server just can't keep up, and people get spurts of data that cause things to seem very jumpy and non-responsive altogether. You'll be lucky if anyone stays for more than 30 seconds once this sort of behavior starts to show itself.
A dedicated server really requires a machine that can be set aside and not touched, except for maintenance and whatnot. Many people do not even have a monitor on the server, preferring to log into the machine remotely to handle any work that needs taking care of.
You can set up a server in a similar fashion as we set up the server in the previous chapter, only this time set Dedicated to 'yes' in Step 8. This is not the way most people set up a dedicated server though. As mentioned, many dedicated servers are run remotely across the Internet, or logged in to via some remote connection. Since they often do not even have a monitor hooked up, many people do not bother slapping a GeForce in the machine, or any type of 3D acceleration at all for that matter. I've seen old Mach64's pop up in these things because they do the job. Know it or not, to get to the main in-game menu, you need a 3D accelerated video card. So how do you start the dedicated server? You do it via a set of command line parameters."
http://q3a.stomped.com/server/dedicated.shtml