All relational databases handle transaction isolation in some way, typically with an implementation of Multi-version Concurrency Control (MVCC). Plain ‘ol, mainline SQL Server uses a form of MVCC, but all older rows (currently retained for ongoing transactions) are stored in TempDB. Oracle and MySQL also do something similar, storing (essentially) diffs of the modified data outside of the table that is merged at runtime for ongoing transactions that still need to see the older data.
Among these databases, PostgreSQL stands alone in the specific way MVCC is implemented. Rather than storing some form of the older data outside of the current table for transactions to query/merge/etc. at runtime, PostgreSQL always creates the newly modified row in-table alongside the existing, older versions that are still needed for running transactions. Yes, every UPDATE creates a new row of data in the table, even if you just change one column.
Read on to understand some of the implications of this and how it affects the way we manage databases.