The nova-network service has the ability to operate in a multi-host or single-host mode. Multi-host is when each compute node runs a copy of nova-network and the instances on that compute node use the compute node as a gateway to the Internet. The compute nodes also host the floating IPs and security groups for instances on that node. Single-host is when a central server—for example, the cloud controller—runs the nova-network service. All compute nodes forward traffic from the instances to the cloud controller. The cloud controller then forwards traffic to the Internet. The cloud controller hosts the floating IPs and security groups for all instances on all compute nodes in the cloud.
There are benefits to both modes. Single-node has the downside of a single point of failure. If the cloud controller is not available, instances cannot communicate on the network. This is not true with multi-host, but multi-host requires that each compute node has a public IP address to communicate on the Internet. If you are not able to obtain a significant block of public IP addresses, multi-host might not be an option.