How does installing a new version of Mac OS X work?

I want to buy the new version of Mac OS X when it releases, but wanted to know a few things:
1. Does installing a new OS erase my Hard Drive?
2. When I install the new OS, will it erase the old OS from my system?
3. Is an Operating System stored on the Hard Drive?

PLEASE HELP.

Mac OS best answer:

Answer by saint1997
1. Yes.
2. If you partition your hard drive, you can have 2 “hard drives” that you can use. But partitioning causes you to have to erase it anyway.
3. Yes.
You probably won’t be able to run Leopard AND Snow Leopard (I am assuming you have Leopard, it’s the same with Tiger) unless you have the install discs for both OSs.