Ubuntu as a windows file?

Wubi, when installed, is seen as a HUGE file on windows. It also modifies the windows boot menu to offer to load up this huge file. The file, it turns out, when loaded, turns out to be ubuntu. So it is not just the linux kernel which is loaded up. The file is essentially a partition that windows is not aware of - it can (I am guessing) have empty space where you can put new ext3 files as well as install new programs!