Exactly the opposite - You view Your N900 application on other machine (linux with X based - native, windows - using special "client", which is in fact X server, no need to get into details before You already check how it works ). Thats why it's called 'X forwarding over SSH' - You can achieve it without virtual desktop, in fact You're just forwarding one program, not whole desktop. Got some advantages and disadvantages over VNC (most common Open standard for virtual desktop) and RDP (Remote Desktop Protocol - semi-open w$ndoze standard, capable of faster user experience while doing basic operations on files etc, but unable to project advanced applications like directx/opengl related. RDP is also possible on linux using special packages)

Take this with a grain of salt, as it's purely theoretical knowledge, I've never used X forwarding over SSH myself.

Important note - OpenSSH package for Maemo lacks some improvements of security - basically, reaction to exploits presented in late 2009, compromising -cbc encryptions in some cases. Prior to that, -cbc was default choice, it was replaced with ,-ctr in correct order of preferences. Of course, if one is feeling paranoical, banning -cbc as whole is also an option, although keeping them as fallback seems sane, due to specific and non-trivial nature of exploiting them (so, in environment controlled by Yourself, You use -ctr, because Your both machines support it and it's higher on client preferences list, but You retain possibility of connecting to other servers, that don't support ctr).

IIRC, 'Ciphers' in /etc/ssh/ssh_config should look like that, for best security and compatibility at the same time:
/Estel