How are artifacts transmitted (published and downloaded) when agent and server are running on the same machine

I have a TeamCity server in which both the server and agent are installed and running on the same VM. I am wondering how my artifacts get moved around, both when uploading after a build and downloading as a dependency. Are the artifacts sent out across the internet and returned to the same machine? I configured my agent to contact the server on 127.0.0.1, so i hope this is how my artifacts get resolved, but I was unable to find any clarity in documentation. Any information on the subject would be appreciated.