In a "pure" InstallScript project, all phases of the installation (user interface, feature and component installation, and file transfer) are all handled by InstallShield technology (MSI plays NO part in the installation whatsoever).
In a Basic MSI project (I know you didn't ask about this, but it helps in understanding the InstallScript MSI if you understand the MSI project type), The entire installation is driven by the Windows Installer (Microsoft) technology--even if you use extensions provided by InstallShield (like running SQL scripts, IIS configuration, XML file changes, and additional custom action types [including InstallScript Custom Actions]--all of which are implemented the "MSI way").
In an InstallScript MSI project, the installation is driven by the InstallScript engine which presents the user interface (dialog boxes), and then when it comes time to install the product, the InstallScript engine invokes the MSI mechanism to carry out the transfer of features, components, and files. When that part is done, you're back to InstallScript to do any post-installation work that may need to be done.
