Modlets add, subtract, and/or tweak the basic (vanilla) game on a small scale. These are typically XML mods that are uploaded to the server’s Mods folder. The server then pushes the changes to the client game, which means these do not need to be downloaded by players.
To add these modlets locally, find/create the appropriate folder:
Local: Steam\steamapps\common\7 Days To Die\Mods Servers vary by host, but the Mods folder is generally found in the root game folder.