Should I keep the replicasets and config servers on separate servers? Or have one replicaset and one config server on one server? Can I have all replicasets on one server and all config servers on another one server? (Does this defeat the purpose of sharding?)
The purpose of sharding is distributing load on multiple servers. The purpose of replication is (mostly) redundancy by allowing one server to take the place of another when that server goes offline for some reason. Obviously, it does not make much sense in either case to run multiple instances on the same server. So yes, it would defeat the purpose of sharding.
However, when you only have two servers and have to choose between replication and sharding, you can get the best of both worlds by creating two shards where each shard has a secondary which runs on the server of the primary of the other shard. That way you have both the performance-improvement when everything is OK but don't lose access to half your data when one server goes down.
Regarding the config servers: MongoDB recommends to make them a separate replica-set which runs on separate servers. But when you are on a budget, it should technically be possible to put that replica-set on the same hardware which runs the actual database. The config servers are only required when a mongos process (re-)starts or when a chunk migration happens and are relatively idle the rest of the time. Unfortunately a chunk migration is also a phase where the involved shards are very busy, so running the config servers on the same hardware will make performance drops during chunk migrations even worse.