Rails: How does the respond_to block work?

I’m going through the Getting Started with Rails guide and got confused with section 6.7. After generating a scaffold I find the following auto-generated block in my controller:

def index
  @posts = Post.all

  respond_to do |format|
    format.html  # index.html.erb
    format.json  { render :json => @posts }
  end
end

I’d like to understand how the respond_to block actually works. What type of variable is format? Are .html and .json methods of the format object? The documentation for

ActionController::MimeResponds::ClassMethods::respond_to

doesn’t answer the question.