A) I don't think you can upload a document  by checking it out.

B) When a document is checked  out, a lock is placed on that document in
the SQL database. It is not copied anywhere. The document stays where
it is, but it is now locked so that only the person who checked it out
can modify it.

Rightly pointed out (by Bill)... My apologies... two statements got
mixed up...
What I meant was I uploaded  a document  in a Doc. library  and then in
order to make changes, right clicked the document and selected check
out...

Thanks for the check  out explanation (it definitely helped)