As mentioned, next month I’ll get to the details of unnesting of derived tables. For now, suffice to say that SQL Server normally does apply an unnesting/inlining process to derived tables, where it substitutes the nested queries with a query against the underlying base tables. Well, I’m oversimplifying a bit. It’s not like SQL Server literally converts the original T-SQL query string with the derived tables to a new query string without those; rather SQL Server applies transformations to an internal logical tree of operators, and the outcome is that effectively the derived tables typically get unnested. When you look at an execution plan for a query involving derived tables, you don’t see any mention of those because for most optimization purposes they don’t exist. You see access to the physical structures that hold the data for the underlying base tables (heap, B-tree rowstore indexes and columnstore indexes for disk-based tables and tree and hash indexes for memory optimized tables).
This article deserves a careful reading.