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I have an SSIS package which transfers the data from one database to another.
The SSIS package runs on an application server.
I am thinking of moving one of the two databases to another data server. Will there be an impact in performance? How is the data flows in SSIS i.e. does all the data go in the application server where the SSIS runs and then to the destination database?
SSIS is a client-side process, so if it is running on a server other than the machine running the DBMS the traffic will be going over the network. Your question is not very clearly worded, but I think you want to know whether moving a DB will affect performance given that the SSIS package is already running on a separate machine.
If the SSIS job is already running on an application server that is a physically separate machine to the DB server then moving one of the databases will probably not affect the performance unless it has a radically slower network connection than the other.