None of these. It RENAMES the files according to what itunes thinks they should be. Meaning, if you add something that isnt well names, it will automatically put it in as Uknown Artist - Uknown Album. You must be very careful. The one great thing about it though is that if you change the artist name or genre or whatever within itunes, it stays changed if you take it out of the library, and then re-add it. If you dont have it set to organized, the file will revert to its preitunes tags once it is taken out of the library.
Hope that made sense.