How does Github Actions work with docker containers?

Consider this GA workflow:

I would like to have a crystal clear understanding what happens there. Currently I reckon:

1. GA will run a ubuntu-latest virtual machine with docker engine pre-installed.
2. It will pull and run cypress/included:10.6.0.
3. All the steps will run inside the Cypress docker container, not on the Ubuntu machine.

Is that correct?

Answer

This seems to be covered in the Github docs: https://docs.github.com/en/actions/using-jobs/running-jobs-in-a-container