How does node.js compile coffeescript?

I'm using coffeescript for my current node.js project, starting the project with the following command (inside my project folder)

coffee app.coffee

Which starts the node application. I am, however, at a loss as to how node.js can interact with the coffeescript - is it compiled to a temporary folder?

Do this:

cat `which coffee`

And you'll see that coffee is actually a node script, which compiles your .coffee file and then runs it.