Questions About Load Order

[kmgdevelopment]

I'm messing around with MSM and I have a question about the order config files are loaded in. Is this correct?:

1. index.php or admin.php
2. /system/expressionengine/config.php
3. /system/expressionengien/database.php
4. /config/config.master.php
   1. /config/config.env.php
   2. environment-specific config file (/config/config.local.php)

I'm also confused about when/how config.env.php gets loaded. The only reference I see for it is in config.master.php at line 36, but the comments & code imply that the environment should already have been defined. If that's the case - where is the environment defined?