Custom Color Options Magento Extension by Temgra

custom_options_layout_update.xml

<reference name="head">
  <action method="addJs"><script>temgra/colorCustomOptions.js</script></action>
  <action method="addItem"><type>skin_css</type><name>css/colorCustomOptions.css</name></action>
</reference>
<reference name="content">
  <remove name="product.info.addto" /><!-- optional -->
</reference>
<reference name="product.info">
  <action method="setTemplate"><template>catalog/product/view-custom.phtml</template></action>
</reference>
<reference name="product.info.media">
  <action method="setTemplate"><template>colorcustomoptions/media.phtml</template></action>
</reference>
<reference name="product.info.options">
  <action method="setTemplate"><template>colorcustomoptions/options.phtml</template></action>
  <action method="addOptionRenderer"><type>select</type><block>catalog/product_view_options_type_select</block><template>colorcustomoptions/select.phtml</template></action>
</reference>

How exactly does this work?