How does D3D do matrix transformations?

Can someone please explain this to me? I know how the matrices are multiplied together and I know that D3D transforms vertices using matrices. But I just can''t understand how it is done? I know I got a vertex with three components, X, Y and Z. But how can this ever fit into a 4x4 matrix? I have read a tutorial which explaied how you can do the transformations yourself by building a matrix with 4 vertices. It looks like this: [x1, x2, x3, x4] [y1, y2, y3, y4] [z1, z2, z3, z4] [1, 1, 1, 1] This matrix is then multiplied by other matrices to apply transformations. But is this the same way D3D does things? Someone please explain this to me.