A RuleSet is stored in an XML file with the same name as the workflow and the extension .rules. Basically they are stored as an XML representation of a CodeDom object. The same rules file also contains all the Declarative Rule Condition used in the Workflow.
A RuleSet executes Rules base on their order from high to low.
FullChaining: If a Rule sets a property and an already executed rule depends on this it will be reevaluated. Do not confuse FullChaining with the kind of backtracking behavior found in some ArtificialIntelligence software.