Where is the thermostat in a 1988 Mazda 323?

There is indeed a thermostat, that mechanically opens and closes to regulate water flow from the engine to the radiator. The thermostat housing is located on the upper part of the engine (front right corner), where there is a black hose leading to the radiator. Take that housing apart, inside you will find the thermostat. It's a round brass thing, about 4cm in diameter.