How does flash load content/preloaders?

Just wondering when say im using the below preloader what it is trying to preload.

does it preload all frames in its parent timeline, or only everthing placed on the stage which is directly on the parent frame after it?

onClipEvent (enterFrame) {
    loading = _parent.getBytesLoaded();
    total = _parent.getBytesTotal();
    percent -= (percent-((loading/total)*100))*.25;
    per = int(percent);
    percentage = per+"%";
    loadBar._width = per*2;
    if (percent>99) {

Kind of question about site stucture. wondering whether or not i should continue to load movies into empty mc’s. Or use some other way to control how things get loaded over time.

any help would be greatly appreciated :jag: