FET-based voltage regulator with TL431
This is a linear regulator, not a switching regulator, so you should not see pulsations. 

Other than that, your understanding is fairly accurate. The TL431 will draw more and more current through the cathode as the voltage on the sense terminal exceeds its internal reference voltage of about 2.5V. The MOSFET is wired as a source follower, so it has a voltage gain of about 1. C2 is there to make sure the feedback to U1 is not unduly delayed, which could cause oscillation. 

So U1 will maintain the voltage at the gate of Q1 in order to have the divided output voltage (R3/R4/C2- node) equal roughly 2.5V. 

Because Q1 is used as a source follower, this regulator will not be low drop-out, however it's much easier to assure stability with various load capacitances because Q1 is not adding voltage gain. There is also a lower limit on output voltage of ~2.5V- achieved when R2+R3 = 0 ohms.