How does it differ from installing any other program? it does the install while out of the system, the system that it is, which it couldnt do while it is runnning. but the install breakout is to ramdisk and spare holes on the hard drive (wont effect what is there), the install is to where you point it.
Because of those other stupid unnessisary partitions , like system (the boot stuff) and recover, we had always formatted First before installing the OS, anyway, so I was in the pattern to not format during the OS install.