(you probably know this and were simplifying, but for the benefit of others who may not ...) Its a filesystem, not an archive. So its contents aren't extracted

(you probably know this and were simplifying, but for the benefit of others who may not ...) Its a filesystem, not an archive. So its contents aren't extracted anywhere on your drives. It stays within the appimage. The squashfs fs used is optimised for use as a read-only, fast access fs. Entire distro's have been built and used (for over a decade), where everything is contained in 1 or more overlaying squashfs containers. Its close to the most optimal method of distributing AND ACCESSING read-only stuff. All the appimage does is it mounts its internal squashfs, and the runs its internal AppDir program (appimages are essentially "squashed" appdirs) Appdirs themselves are a sadly underrated agnostic pkg'ing format, which have great flexibility & utility (imho).