I'm running the GUI version of Bitcoin Core. But I want to also be able to interact with bitcoin-cli in my windows console. Apparently I need to set the -server flag before running bitcoin-qt, or set "server=1" in the config file. (I notice I can also tick a box in the GUI that says "Enable RPC Server" - I suppose that does the same thing?)
But I don't understand what this is actually doing behind the scenes. What does it mean that its running as a "server", as opposed to not being a server?
Are there any downsides to doing this, particularly on the security/privacy front?
Also, I'm curious as to why I'm required to have a username/password if wanting to use bitcoin-cli?