is right. If they add new mobs or blocks or items or anything of that sort, they won't work on a server unless the server has the same mod(s) installed. Server-side mods have to be done differently, so you can't just patch a single-player client mod into a server.
The way mods are done on servers, for the most part, is through CraftBukkit. CB doesn't allow you to add new items but it extends gameplay functionality, allowing mods for things like warps, fine control of mobs and items, permissions, grief protection, etc.
Maybe at some point there will be a universal plugin API that would allow a client to receive mod data from a server on-demand, but no such beast exists now.