confused about where imagecache should be storing images.

I have image cache installed correctly but I am a little confused about the path settings when creating a content type. Let's say I create a content type called Event and put an image field that allows me to upload a an image (I call it Post Image with a field name of field_post_image). In the 'Display Fields' tab I configure Post Image to output using an Image Cache setting called 'post_photo'. I'll then click the 'manage fields' tab, and select 'Post Image', I can scroll down in to a section called 'Path settings' where there is a field called 'File Path'. The note under the field reads, "Optional subdirectory within the "files/" directory where files will be stored. Do not include preceding or trailing slashes." If I just the word 'events' in that field, I would assume that the images would be stored in http://domain.com/sites/default/files/events - but this is not the case. The file is actually stored in http://domain.com/sites/default/files/imagecache/post_photo/events.

This is my first time using image cache, and I am not sure if this is the way it is supposed to work. Does Image Cache somehow reset the root of 'files' to 'files/imagecache'?