Microsoft SharePoint Server 2016 Connector: IQService Configuration Queries (IdentityNow Connector)

Yes, the SharePoint Server and the IQService should be part of same network.
They can be installed on different physical Servers as long as they can communicate with each other across the network. The SharePoint server connector is carried out via IQService only, so you need to keep both on same network or domain. The VA can be placed anywhere on the network as it should have proper connectivity with the IQService listening port.

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