I will start by saying I am not a developer or even remotely close so assume part of what I am about to say is wrong. I have been listening and reading for the last 5 years though, so part of it will be correct.

The short answer to your question is it depends on the layer 2 application. All layer 2 applications will utilize layer 1 in some form (otherwise it would just be a stand alone application like current web 2 apps). The layer 2 app can be centralized or decentralize. It can be open sourced or it can be close sourced. Hive-Engine is a layer 2 application. Splinterlands is a layer 2 application. Peakd is a layer 2 application.

The goal is to keep layer 1 as lightweight as possible so the blockchain as a whole is easiest, fastest, and cheapest to run, and most importantly, scalable.

Having everything on layer 1 would bloat the chain. This is one reason some chains have high gas fees. By being lightweight, Hive is able to have no fees (except replenishable RCs). This allows for economical gaming and micro-transactions.

Having more on layer 2 also ensures there are less hardforks, which in addition to keeping the network secure and up-and-running, this should be a nice and marketable feature to exchanges, who probably don’t appreciate needing to constantly upgrade things on their end. I haven’t seen this discussed, but I think this would be a huge selling point for the likes of coinbase, etc.

Since layer 2 doesn’t require hardforks, development can also be faster.