What is the mechanism of a git checkout?

does a git checkout pull the contents of a branch? how does it physically separate files in your working directory from other branches?

The speed of which it works leads me to the logical conclusion that the files in the working directory are all there for all branches and git simply only shows you the files of the active branch.

Can anyone shed more light on the underlying mechanisms of git checkout maybe even branch and merge as well?

thanks -diego www.greyrobot.com