Relationship between the UDKGame and Development/Src directories

[paco]

I'm a bit confused about the relationship between the various directories in the UDK (version UDK-2012-01 ). Here's my understanding - I'm hoping someone can point out/clarify anything i've messed up.

Development\Src:
Contains a whole bunch of source for classes that get pointed to by components in UDKGame.

UDKGame:
Everything seems to be compiled/configured from here. Ie, this is the main control for the build and you can't bypass it. So in order to create your own game, you need to work with UDKGame, and change the settings to point to your custom classes like PlayerController, etc which are defined in the Src directory. Maps and all other content also goes in the UDKGame directory. It comes pre-populated with a bunch of content for the demo UTGame, however if these components aren't referenced in the game (configs or whatever) then they don't get included in the final package. So for a new game you can either just leave them there and de-reference them or get one of the blank installs floating around.

Does this sound correct?