One way to see this in action is to open one of your PHP pages in a web browser and then choose the 'View Source' option. You will not see any PHP code; you will only see what the PHP has outputted because all of the code was executed on the server before it was delivered to the browser.
<?php $Cat = "Spot"; $Dog = "Clif"; Print "My cat " . $Cat . " and my dog " . $Dog . " like to play together."; ?>
While the PHP file may contain all of the information above, your browser will only ever receive the information: My cat Spot and my dog Clif like to play together.