How is it possible for CSS code to be in a false directory but still be used?
I can't find how he can link CSS files to a theme thats not even located in the sub-theme folder.


He's not, the system is doing that part.

When you have CSS aggregation enabled, Drupal concatenates all the relevant files together per-page (bit more complicated than that actually, but for the sake of argument that'll do), and those are served instead of multiple originals. Compressed versions are also created for browsers that support it, yes.

If this is messing with you, just pop to the Performance settings page at admin/config/development/performance, switch off CSS aggregation, reload your page, and check the source again. You'll now see links to the original, un-merged CSS files within the theme.