The brain is able to understand the information and puts it into the long term memory during the PhotoReading step. The fact that the minds eye can recognise information has been known for a long time. It's further backed up by research from Rice University in Houston more recently..
What we do during the PhotoReading step is make deliberate use of the preconscious processor. Yes it looks blurred to the because we think every thing we see is in focus (thanks to the fovea). The peripheral vision appears out of focus and yet we use it for our own safety everyday. It's our mind that draws our attention to what we need to focus on after recognising it in the peripheral vision. Anyone studying martial arts can appreciate this ability.
I think the real score of the PhotoReading step lies in Direct Learning. Many people have used this aspect of the PhotoReading technique to improve still which most people think take long periods of training. Improving managerial skills, golf games, tennis, chess. Developing communication skills and even solving computer programming problems by PhotoReading a number of books on the subject (without manual activation).
In short. Yes. The mind processes the information during PhotoReading. How? Brain research is still ongoing but experience shows a strong purpose or reason for wanting to know the information is a great boost for the beginner.
Superreading guides you to dip for the phrases or points that pull the page together. During the first activation it will seem global to the conscious mind because PhotoReading gave you everything. How detailed you want to understand it consciously is up to you and you get it through multiple activation layers (keep them short
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Alex