I will advise you to follow the below explanation for this answer:
Nagios runs on a server, usually as a daemon or service. Nagios periodically runs plugins residing on the same server, they contact hosts or servers on your network or on the internet. One can view the status information using the web interface. You can also receive email or SMS notifications if something happens.
The Nagios daemon behaves like a scheduler that runs certain scripts at certain moments. It stores the results of those scripts and will run other scripts if these results change.
Now expect a few questions on Nagios components like Plugins, NRPE etc..