For example - I see lot many different fonts on webpages.
Does the fact that I am able to view them mean that they all are installed on my system?
I do not think so. Then, how does my browser render them and show them to me?
If they're just there in plaintext, then yes, it should be installed. If they're not installed, the website is either using 1) an image, 2) a flash element to render the font, 3) css @font-face or 4) a canvas element.
Generally, the fonts are already installed on your system. However, there are two exceptions:
1) The webpage designer may use a CSS
2) The webpage designer may have saved the text as an image. This is fairly common for cursive and other complicated fonts.