Surreal works by marking off an area of a page using a div statement surrounding what you want to edit.
On your surreal account you tell it what domain to work with and it finds these editable areas/pages When you want to change something you just select the page from a list and surreal ftps the content to their site, you edit and when you "save" what you are doing is ftping the content back to your domain.
All content resides on your site, but it is FTPed to their site where you use their editing tools. The free version is obviously an external editor as the URL and branding is surreal. The paid version allows you to make a custom a record that uses your URL to display their content and allows for custom branding. This is nice if you don't want to have your customers find out how easy it is and cut you out of the picture and do it themselves