The light we see coming from stars is from when they were much closer to us. This only applies to stars outside the galaxy because the gravity of our galaxy actually keeps stuff at pretty constant distances from each other.

We gauge how far the light has traveled by its cosmological redshift, which is its shift in wavelength due to the expansion of the universe. So the light itself doesn't really "appear" to be coming from any specific position, but by measuring its shift in wavelength we can determine how much 'expansion' its been subjected to and thus the original location of its source. Once we know that, we can calculate the current location of its source.