Folder Query Editor - Which Query Runs First?

So I have a dataset that connects to a folder and brings in multiple Excel files. When doing this, Power BI asks you to setup a sample file to transform. Then there is the main query that you intially created.

My question is this:

What happens first? Does Power BI run through all the files in the folder performing the transformation steps you listed in the sample transformation file? Then once all the files are loaded it runs through the main query transformations?

Or does it bring in one file at a time and apply the sample file transformation, the main query transformation, and then moves on to the next file in the folder repeating the same steps?