adding packages to internal repo

We have a handful of RHEL 6.5 clients that connect to our internal repository. I'm new to RHEL, so how does the Repo work? Does it maintain a list of available files for our clients? Or does it simply act as a passthrough to ftp.redhat.com for our clients?

If need to make some new ( new versions or new as in not installed ) to my RHEL clients, do I have to actually 'install' them ( yum install cpp.x86_64 ) onto the Repo server? Or is there a holding place of sorts on my repo server that is populated from RH via yum commands? Thanks.