Originally Posted by Raze1988
You have it pretty much correct, but to explain in more detail:
A developer will compile their code as an ELF, pretty run of the mill, then use a tool called "make_fself" or "make_fself_npdrm", as you can guess, they make "fake" SELF's. One of which can run from just about all media, the other (NPDRM) only from hard disk.
The fake selfs, although are "signed", are not encrypted. It's basically a format that is compatable with the SELF loading system of the PS3, although the PS3 does not care about the encryption. Its more complicated than that, but that's generally how it is.
Once the developer finishes their game (or patch), it gets sent to Sony, and they encrypt the SELF for retail units.
Then , the SELF, which was all done up (usually compressed and encrypted), is put to disc, or made available on the PSN store.