How does the Blender Internal Renderer create Environment Lighting exactly? I'm using Blender 2.77 and I have currently arrived at the native Blender Renderer engine, and I fully want to understand how it works and how I can use, adapt, modify it for my own Blender projects. 

I've already read many free e-books, articles and watched many videos about it, but I want to be able to truly understand AND visualize its inner workings.

Unfortunately the official Blender Render manual does not offer much in-depth/under-the-hood insight on how stuff really works, so I still have lots of technical in-depth questions about the Blender internal Render engine like:

QUESTION: - How does BI create "Environment Lighting"?

Is this done by adding just another (hidden) Lamp (like spot, point, hemi, sun, area) to the scene or is it done otherwise?
From the Blender documentation 1

Environment Lighting

Environment light provides light coming from all directions.

Light is calculated with a ray-traced method which is the same as that used by Ambient Occlusion. The difference is that Environment lighting takes into account the “ambient” parameter of the material shading settings, which indicates the amount of ambient light/color that that material receives.

Environment Lighting panel.

Also, you can choose the environment color source (white, sky color, sky texture) and the light energy.

Energy: Defines the strength of environment light.
Environment Color: Defines where the color of the environment light comes from.

Using both settings simultaneously produces better global lighting.

It is good for mimicking the sky in outdoor lighting. Environment lighting can be fairly noisy at times.

Internally blender creates a sphere with these settings. Sampling this sphere will influence the ambient parameter in the reflection model.