Layer File saved from ArcGIS Server Inagery source

Discussion created by gordons on Jun 19, 2014
Using ArcMap 10.2, I saved Image layer files from ArcGIS servers to version 10.0 files
and removed the server connections in ArcCatalog. Layer files are light-weight and versitile
options for sharing, they draw fast, and obviously work without the server connection. 
So, my questions are:
1. How do they work without the server connection?  Is the server path in cache?
2. Does the use of the layer file vs accessing the imagery via the server connection potentially
reduce network traffic and increase overall performance for a large number of ArcGIS
users on the same (very slow) network?