In an organization, computers are connected to each other which make a network. In the network, various tasks are completed by different computers and data is shared among computers. Every computer is controlled by different methods and different ways of processing are done on the network. On the network, some computers have high processing power as compared to others.
In centralized processing, one or more terminals are connected to a single processor. Note that terminal is the combination of mouse, keyboard, and screen. In-library there is one processor attached to different terminals and library users can search any book from the terminal (mouse, keyboard, and screen). In centralized processing all the terminals are controlled by a single processor (CPU) and any command can be fulfilled by a single processor and this type of network is called centralized network.
In decentralized processing, there are different CPU connected on the network and each processor can do its job independent of each other. For example, in a Net cafe, all computers can perform their own tasks. This type of network is called decentralized network.
Another type of processing also exists named distributed processing. In this type of processing different CPU are connected to the network and are controlled by single CPU. For example in air reservation system there exists different terminals and processing is done from many locations and all the computers are controlled by the single main processor. This type of network is called distributed network.