How does Photos app store image files under the hood?

Images are not stored in directories that match albums or any other construct.

Likewise with metadata. When images are imported, this data is stored in a database (for quick lookup), and this is used internally when using Photos.app.

You can check this yourself by navigating to ~/Photos, Ctrl-clicking on Photos Library.photoslibrary and choosing Show Package Contents. You'll see the database folder where the metadata is stored, along with an Originals folder that contains sorted subfolders of the images.

This also extends to edited photos - the original image is retained intact, alongside the edited version (so you can revert any changes you make), and the database keeps track of the versions.

All the data (edits, metadata, etc.) are merged when you export or copy an image out of Photos.app.

Photos stores images in its own inscrutable way, the folder and album structure are only in the database.

*Some* Exif data like time and date are written to the originals. Most EXIF data, like location, is not. There are some programs like Houdah Geo that can write this info into the originals.