The source server and the target server are installed on the same machine , but under different install locations. You can choose to perform this type of upgrade if you wish to have the configuration corresponding to these installations on the same machine in different locations.
A side-by-side upgrade involves the following sequence of tasks
To Upgrade Remote Node Agents (Side-by-side) (only if you have remote agents in the source application server).
If all existing node agents (from the source application server installation) run on a single machine, the upgrade tool automatically detects node agents, if any, on the source installation.