シェアーポイントの設定

最近マイクロソフトのシェアポイントサーバーを導入して設定しています。　　I am having some difficulty adding a new "share point solution". Basically, the questions I have are:
1. what is a SharePoint solution? It seems to be a set of ASP pages and dlls which run behind a SharePoint page or web service and which is reachable via dispatch from SharePoint web parts (e.g. buttons).
2. what does the add-spsolution cmdlet in PowerShell actually do? The documentation indicates that it "uploads" the solution (which is in a .wsp file) to SharePoint. Does this mean that files are unpacked into the SharePoint file system hive, or that the .wsp file itself is saved either in the file system or SQL server?
3. what does the install-spsolution cmdlet in PowerShell actually do? Does it edit the registry, SQL server, or XML config files?