What are MSI based Installations?

Windows Installer is an engine you can use to manage the state of an application. The state of an application includes installation, modification, upgrade, or removal.
Windows Installer is not a tool to create and deploy installations, rather it is a service built into the OS. Software-distribution technologies use Windows Installer to install and manage software applications.
The Windows Installer technology is made up of three elements that work together: the Windows Installer client, the Windows Installer service, and the Windows Installer package (an .msi file).

1. Windows Installer Client
The Windows Installer client is any application that calls upon Windows Installer service to perform a task.
The Windows Installer client is responsible for user interactions such as displaying the Setup user interface during an installation. For example, the Windows Installer client uses the Windows Installer service to change the computer state by copying files and writing registry changes.
Some common clients include the following:
a) The Windows-based shell.
b) Add or Remove Programs in Control Panel of Windows XP Professional and Windows 2000 Professional.
c) Windows Installer-enabled applications, such as Office 2000.

2. Windows Installer Service
The Windows Installer service uses information in a Windows Installer package file to manage all phases of installing a program– add, change, upgrade, and remove. The Windows Installer service performs all installation-related tasks as needed by copying files onto the hard disk, making registry modifications, creating shortcuts on the desktop, and displaying dialog boxes to capture user preferences.

3. Windows Installer Packages
Each Windows Installer package (.msi) file contains a database that stores all the instructions for the Windows Installer service and data required to manage the state of a program, such as adding, changing, or removing it from a computer.
Creating and editing all the tables in the database could by itself be a huge task to accomplish.
To simplify creating and customizing .msi files, Software-distribution authoring tool vendors have developed various authoring tools for Windows Installer such as Wise Installer or Installshield Professional.
As is evident from above, since the Installer service is part of the OS, we need not include an engine to carry out the installation, rather we need to supply all the information that is needed by this service to execute the installation. It does not matter what tool has been used to create the MSI package.