Duck needs to answer more fully, but in short, if you hit a record button in photoshop, it can record actions that a human being takes. The recording of those photoshop steps is called an "action". These recordings can be saved and loaded (for repeated tasks for instance). These recordings can also be bought and loaded into PS.
For this action, Basically you have your Background image, create a layer above it, paint on it (to select the area you want to have "worked"), load the action and hit the play button. And then PS executes the steps in order. Almost as if PS was running in an automatic mode replicating steps that someone else created. So yes, it is all native PS.