Gitlab-ci-multi-runner + deploy on remote


I’m new in Gitlab and CI.
I have a case with 3 servers: Gitlab(7.8.0), GitlabCI and Prod. I need to setup a system where git push to gitlab (from dev’s computer) triggers gitlab-ci-multi-runner that reads .gitlab-ci.yml and executes bash command or bash script that makes git pull on Prod server in /var/www/. My gitlab_ci is integrated with gitlab, but i cann’t setup ci-multi-runner. I don’t understand where it must to be installed, on which instance? On Gitlab/ CI / Prod?
One more question is about .gitlab-ci.yml. In documenation says: “GitLab CI uses a YAML file (.gitlab-ci.yml) for the project configuration. It is placed in the root of your repository”. Does that literally mean the root is /home/git/repostitories/example.git/? Or it’s about master branch?

When i trying setup this system i installing gitlab-ci-multi-runner on same server with gitlab_ci and set ssh executor to Prod. But on each git push i get error .gitlab-ci.yml not found in this commit.

Please explain me what i’m doing wrong.
Thank you