Will the Provider render my whole App client-side?

I am following this PostHog tutorial and it involves wrapping my whole app in the PostHogProvider, which has a use client directive. Will this effectively turn my whole app into a client side app and opt me out of Next.js server components?

// app/providers.js
'use client'
import posthog from 'posthog-js'
import { PostHogProvider } from 'posthog-js/react'

export default function PHProvider({ children, bootstrapData }) {
  if (typeof window !== 'undefined') {
    posthog.init("<ph_project_api_key>", {
      api_host: "https://us.i.posthog.com",
      bootstrap: bootstrapData
    })
  }

  return <PostHogProvider client={posthog}>{children}</PostHogProvider>
}