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This message is from Windows Installer, and the wording is chosen because of the intended method of deployment of applications in corporate environments - administrators put .MSIs to network shares, then assign domain computers to install from there, and after that, the original source may become unavailable. The wording has nothing to do with the actual placement of install media neither at the moment of installation, nor at the current time.

See this answer for other parts of your question. Especially note that "deleting program files" is not equal to uninstalling a program: the history of it being installed, as well as the files in other locations (e.g. fonts), registry settings stay and interfere with following installations.