What happens on mod install?

No insults please if someone here thinks I should know this, but could someone tell me what happens on the mod installs.  Specifically, is it mostly a database set-up, or are files created or modified?  Suppose, for example, you install all the mods and then do a full database structure and content backup, and then later restore from that backup - perhaps on a future version.   Will the mods be installed on the restored version?

I just spent a lot of time going through D7 Files on server and install package and I could NOT find any new files added, doesn't mean it doesn't write any, but appears to be purely a database side thing that happens when you install the mods. 

If someone else can find new files inside of modules created after the modules are installed please let us know.