How does it work?

Hi! First of all let me say that I am really impressed by this theme. It’s very slick and works very good out of the box. The number of tweaks required is very low and this makes it one of my favourite themes ever.

One question: how does the image hangling works? I noticed that when you put an image for the header the theme does something. I see that there are many different versions of the same image. What is doing it?