Apt-get is APT package handling utility (CLI), back-end to Synaptic and Aptitude.
The apt-get method on triggering from your system checks the official sources or repositories listed in the file
For eg. on running
sudo apt-get update && sudo apt-get upgrade (which i use) , runs something like
where the Ign (Ignore) in-front of the Link states that no change is made since last visit to that repositories , and the Get states the retrieval of Sources file stating the changes of newly available package in that Repository .
No , apt-get utility doesn't downloads the Source File , it rather downloads the .deb package packed and released by the Official Ubuntu Packagers which has been tested for Stability and Integration with your system.
The apt-get downloaded packages can be found in
where you can see all the
Updates as .deb packages , and you can even compare to cross-check their version by visiting this Precise-updates packages.
As far as Compiling from source packages is concerned , it is not advisable and not even recommended for Ubuntu 12.04 as it a LTS Release ,you can view the reasons here
Is it better to compile from source or to install from a .deb package?
Does compiling programs from source speed up my operating system?
Advantages/Disadvantages of installing from source code
For further References : apt-get, sources.list.