How vSphere Replication Works
"When you configure a virtual machine for replication, the vSphere Replication agent sends changed blocks in the virtual machine disks from the source site to the target site, where they are applied to the copy of the virtual machine. This process occurs independently of the storage layer. vSphere Replication performs an initial full synchronization of the source virtual machine and its replica copy. You can use replication seeds to reduce the amount of time and bandwidth required for the initial replication."
"When you manually recover a virtual machine, vSphere Replication creates a copy of the virtual machine connected to the replica disk, but does not connect any of the virtual network cards to port groups. You can review the recovery and status of the replica virtual machine and attach it to the networks. You can recover virtual machines at different points in time, such as the last known consistent state. vSphere Replication presents the retained instances as ordinary virtual machine snapshots to which you can revert the virtual machine."
This says the same thing I said, while its replicating its just the vmdk, but when you recover it thats when it it creates the recoverd vm.