These would be Ripped tracks.
When MC imports a file into its Library (either via Rip or a File Import), it populates a Filename field. That is used to locate the media file. This location is set in the base, folder, and filename rules under Tools > Options > File Location > Audio.
MC also maintains a CD database so that it knows the CDs you've inserted. It looks up meta information about the CD, so that ripped tracks may use this meta data (i.e. tags).