Does jsystem must be installed on the target machine (i.e. product) or can be installed on PC and communicate with the target machine (sockets, WEB, telnet etc)?
I have an embedded product running C++ firmware.
Can I use jsystem from a PC, while each test will run APIs from the firmware on the embedded product? How can it use it (WEB, communication protocol etc)?
sure you can
most test envs are using separate systems for running the automation system and communicating with the devices under test with various APIs (SNMP, TELNET, SSH, SELENIUM, SOAP, NETCONF, TCL-SHELL, RPC ETC)
you may also develop your own API to the device - it is very flexible and allows almost everything you want