All code in the .aspx file will .aspx to or from code blocks ( <%%> ).
Modifying the .aspx file will recompile IIS on the next request.
See MSDN - Dynamic Compilation of ASP.NET .
Update (next comment):
As for the development work, pretty much the same thing happens when you use the dev web server to view the page. You do not need to recompile the solution / project, but the page will be recompiled dynamically.
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