When the mksysimage Python script generates a target image, it creates the image filesystems (IFSs) and the partition images, then assembles these partition images into a complete target image, which you can transfer to the target board.
The image generation process is launched by the mksysimage script. This script and the other scripts and utilities it calls use input from configuration files, including profile and fileset files to produce artifacts that are assembled to produce the final target image.
The image generation process creates a set of disk images, each with a list of filesystems populated by files specified by lists of filesets. At the end of the process, the diskimage utility assembles these filesystems into a target image that can be copied to the target system.