How much more robust is the download version compared to the web version of Confluence? Can we host it so it is on the web?
Yes, that is true. OnDemand is limited in what you can add to it in terms of addons (you are only allowed to add the ones Atlassian have stated they can support the use of), and you cannot change the code either.
If you download it, you can apply any plugins you feel you need, and customise the code if you have to (with the caveat that you have to keep part of the footer intact, and your changes won't be supported if you have problems with them).
Let me clarify. I know I have been told for a few items that I cannot customize items on the web that I could customize on a downloaded version. I need it to be a bit more customizable than it doesn't quite meet all our needs. Some of it has to do with the team calendars which is a huge item to us.
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Depends on what you mean by "robust"?
I'm assuming by "the web version", you mean "hosted by Atlassian OnDemand" - that's essentially the same software, with some quite minor tweaks made to enable Atlassian to host it in the way they want to. So the basic answer is really "they're the same".
You can put your downloaded version on the internet if you want to - it's entirely up to you.
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