Why is this language a regular language?
This is not an union of two regular languages! It's a concatenation. Note the difference,


Union: $L_1 \cup L_2$  
Concatenation: $\{ab : a \in L_1 \wedge b \in L_2\}$.


That said, your other observations are correct, and indeed the concatenation of two regular languages is also regular itself. You can prove this by  constructing two NFAs for the regular languages and connecting the accepting states of $L_1$ to the starting states of $L_2$ by an $\epsilon$-transition.