Technically I think (could be wrong) clients could send events (eg notes) that they haven’t directly created to other relays.

So if you post a note to relay X, my app downloads the note. It is then possible for my app to post the note to relay Y… thereby propagating it throughout the network of relays.

In practice I don’t think this is happening but rather the list of relays containing the note is instead propagated (NIP-65)

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That's my understanding too. All prior events are signed and can therefore be sent to a relay by a client for distributing.

I think the line between clients & relays will blur over time.

There are many reasons why you'd want to have them both running on the same machine.