Understanding how Box2D manages collisions

package {
	import flash.display.Sprite;
	import flash.events.Event;
	import flash.events.MouseEvent;
	import Box2D.Dynamics.*;
	import Box2D.Collision.*;
	import Box2D.Collision.Shapes.*;
	import Box2D.Common.Math.*;
	import Box2D.Dynamics.Joints.*;
	public class cratetest extends Sprite {
		public var m_world:b2World;
		public var m_iterations:int = 10;
		public var m_timeStep:Number = 1/30;
		public var mousePVec:b2Vec2 = new b2Vec2();
		public var real_x_mouse:Number;
		public var real_y_mouse:Number;
		public var pixels_in_a_meter = 30;
		public var worldAABB:b2AABB = new b2AABB();
		public var gravity:b2Vec2 = new b2Vec2(0.0, 10.0);
		public var mouseJoint:b2MouseJoint;
		public function cratetest() {
			addEventListener(Event.ENTER_FRAME, Update, false, 0, true);
			stage.addEventListener(MouseEvent.MOUSE_DOWN, on_mouse_down);
			stage.addEventListener(MouseEvent.MOUSE_UP, on_mouse_up);
			worldAABB.lowerBound.Set(-100.0, -100.0);
			worldAABB.upperBound.Set(100.0, 100.0);
			m_world = new b2World(worldAABB, gravity, true);
			var m_contactListener=new b2ContactListener();
			m_world.SetContactListener(m_contactListener);
			var body:b2Body;
			var bodyDef:b2BodyDef;
			var boxDef:b2PolygonDef;
			bodyDef = new b2BodyDef();
			bodyDef.position.Set(8.5, 13.5);
			boxDef = new b2PolygonDef();
			var ground_width = 8.5;
			var ground_height = 0.5;
			boxDef.SetAsBox(ground_width, ground_height);
			boxDef.friction = 0.3;
			boxDef.density = 0;
			bodyDef.userData = new floor();
			bodyDef.userData.width = ground_width * 2 * pixels_in_a_meter;
			bodyDef.userData.height = ground_height * 2 * pixels_in_a_meter;
			bodyDef.userData.name = "Floor";
			addChild(bodyDef.userData);
			body = m_world.CreateBody(bodyDef);
			body.CreateShape(boxDef);
			body.SetMassFromShapes();
			for (var i:int = 1; i <=5; i++) {
				bodyDef = new b2BodyDef();
				bodyDef.position.x = Math.random() * 15 + 1;
				bodyDef.position.y = Math.random();
				var crate_width:Number = 1;
				var crate_height:Number = 1;
				boxDef = new b2PolygonDef();
				boxDef.SetAsBox(crate_width, crate_height);
				boxDef.density = 1.0;
				boxDef.friction = 0.5;
				boxDef.restitution = 0.2;
				bodyDef.userData = new crate();
				bodyDef.userData.width = crate_width * 2 * pixels_in_a_meter;
				bodyDef.userData.height = crate_height * 2* pixels_in_a_meter;
				bodyDef.userData.name = "Crate "+i;
				body = m_world.CreateBody(bodyDef);
				body.CreateShape(boxDef);
				body.SetMassFromShapes();
				addChild(bodyDef.userData);
			}
		}
		public function Update(e:Event):void {
			m_world.Step(m_timeStep, m_iterations);
			if (mouseJoint) {
				var mouseXWorldPhys = mouseX/pixels_in_a_meter;
				var mouseYWorldPhys = mouseY/pixels_in_a_meter;
				var p2:b2Vec2 = new b2Vec2(mouseXWorldPhys, mouseYWorldPhys);
				mouseJoint.SetTarget(p2);
			}
			for (var bb:b2Body = m_world.m_bodyList; bb; bb = bb.m_next) {
				if (bb.m_userData is Sprite) {
					bb.m_userData.x = bb.GetPosition().x * pixels_in_a_meter;
					bb.m_userData.y = bb.GetPosition().y * pixels_in_a_meter;
					bb.m_userData.rotation = bb.GetAngle() * (180/Math.PI);
				}
			}
		}
		public function on_mouse_down(evt:MouseEvent):void {
			var body:b2Body = GetBodyAtMouse();
			if (body) {
				var mouse_joint:b2MouseJointDef = new b2MouseJointDef;
				mouse_joint.body1 = m_world.GetGroundBody();
				mouse_joint.body2 = body;
				mouse_joint.target.Set(mouseX/pixels_in_a_meter, mouseY/pixels_in_a_meter);
				mouse_joint.maxForce = 10000;
				mouse_joint.timeStep = m_timeStep;
				mouseJoint = m_world.CreateJoint(mouse_joint) as b2MouseJoint;
			}
		}
		public function on_mouse_up(evt:MouseEvent):void {
			if (mouseJoint) {
				m_world.DestroyJoint(mouseJoint);
				mouseJoint = null;
			}
		}
		public function GetBodyAtMouse(includeStatic:Boolean=false):b2Body {
			real_x_mouse = (stage.mouseX)/pixels_in_a_meter;
			real_y_mouse = (stage.mouseY)/pixels_in_a_meter;
			mousePVec.Set(real_x_mouse, real_y_mouse);
			var aabb:b2AABB = new b2AABB();
			aabb.lowerBound.Set(real_x_mouse - 0.001, real_y_mouse - 0.001);
			aabb.upperBound.Set(real_x_mouse + 0.001, real_y_mouse + 0.001);
			var k_maxCount:int = 10;
			var shapes:Array = new Array();
			var count:int = m_world.Query(aabb, shapes, k_maxCount);
			var body:b2Body = null;
			for (var i:int = 0; i < count; ++i) {
				if (shapes[i].m_body.IsStatic() == false || includeStatic) {
					var tShape:b2Shape = shapes[i] as b2Shape;
					var inside:Boolean = tShape.TestPoint(tShape.m_body.GetXForm(), mousePVec);
					if (inside) {
						body = tShape.m_body;
						break;
					}
				}
			}
			return body;
		}
	}
}

/*
* Copyright (c) 2006-2007 Erin Catto http://www.gphysics.com
*
* This software is provided 'as-is', without any express or implied
* warranty.  In no event will the authors be held liable for any damages
* arising from the use of this software.
* Permission is granted to anyone to use this software for any purpose,
* including commercial applications, and to alter it and redistribute it
* freely, subject to the following restrictions:
* 1. The origin of this software must not be misrepresented; you must not
* claim that you wrote the original software. If you use this software
* in a product, an acknowledgment in the product documentation would be
* appreciated but is not required.
* 2. Altered source versions must be plainly marked as such, and must not be
* misrepresented as being the original software.
* 3. This notice may not be removed or altered from any source distribution.
*/
 
package Box2D.Dynamics{
 
 
	import Box2D.Collision.*;
	import Box2D.Collision.Shapes.*;
	import Box2D.Dynamics.Contacts.*;
	import Box2D.Dynamics.*;
	import Box2D.Common.Math.*;
	import Box2D.Common.*;
 
 
	/// Implement this class to get collision results. You can use these results for
	/// things like sounds and game logic. You can also get contact results by
	/// traversing the contact lists after the time step. However, you might miss
	/// some contacts because continuous physics leads to sub-stepping.
	/// Additionally you may receive multiple callbacks for the same contact in a
	/// single time step.
	/// You should strive to make your callbacks efficient because there may be
	/// many callbacks per time step.
	/// @warning The contact separation is the last computed value.
	/// @warning You cannot create/destroy Box2D entities inside these callbacks.
	public class b2ContactListener {
 
		/// Called when a contact point is added. This includes the geometry
		/// and the forces.
		public virtual function Add(point:b2ContactPoint):void {
			trace("Collision between "+point.shape1.GetBody().GetUserData().name+" and "+point.shape2.GetBody().GetUserData().name);
			point.shape1.GetBody().GetUserData().alpha=0.5
			point.shape2.GetBody().GetUserData().alpha=0.5
		}
 
		/// Called when a contact point persists. This includes the geometry
		/// and the forces.
		public virtual function Persist(point:b2ContactPoint):void {
			point.shape1.GetBody().GetUserData().alpha=0.5
			point.shape2.GetBody().GetUserData().alpha=0.5
		}
 
		/// Called when a contact point is removed. This includes the last
		/// computed geometry and forces.
		public virtual function Remove(point:b2ContactPoint):void {
			point.shape1.GetBody().GetUserData().alpha=1
			point.shape2.GetBody().GetUserData().alpha=1
		}
 
		/// Called after a contact point is solved.
		public virtual function Result(point:b2ContactResult):void {
		}
	}
 
}