Is intransit Inventory a physical Inventory location or just an account ?

Hi Inventory Gurus, I was going thru the Inventory user guide which says, that intransit inventory is typically used when the transportation time is very high, so they have a hop of intransit inventory.
So I did an inter-org transfer to a intransit inventory by giving only the from sub- inventory and was able to successfully save it. For the transaction I did, I was not able to see that in Intransit Value Report.
I know that I can receive it using the standard receiving functionality (just like any PO receipt).
 My question is that is Intransit shipment is it a physical location or is it just a account that you set. I mean do you set a particular inventory org as an intransit inventory ?  And once the quantity is intransit ,then can we see the onhand for the intransit inventory going up ?