ModuleScript - How will it run?

I haven't worked with ModuleScripts in a while, so I'm not sure exactly how they run. I know how to use them (Return something in the ModuleScript and use require() to access what has been returned) Yet I can't remember if the ModuleScript runs how I'm thinking it is.

Let me try to explain...

In this ModuleScript, I have this function:

return function()
    print(arg1)
end

In this LocalScript, I have this in it somewhere:

local arg1 = "This was an argument loaded from the LocalScript, or is the ModuleScript loading the code into me??"
local MS = require(game.ReplicatedStorage.ModuleScript)

MS()

So, does the ModuleScript just injects its code into the LocalScript? Or does it just run the function within the ModuleScript? I can't really do much of a test since my internet's down and I'm using my Phone.