Where the zones are
In response to your questions: Are the zones on the negative? Are they on the paper? Are they in the scene? The answer is yes to all three. The 'zones' in the subject represent the subject's luminance range, in the negative they are represented by the varying densities from somewhere above Film Base + Fog to the maximum density of the film (D-Max), and same for the paper. The goal is to carry the subject luminance through to the paper, allowing of course for artistic interpretation.