RadDomainDataSource is built upon Microsoft WCF RIA Services, so it is Microsoft WCF RIA Services that does all of the client-server communication. RadDomainDataSource is in fact unaware of what is going on between the client and the server. This job is done by the DomainClient.
I am sure that you will get a very detailed answer regarding the inner mechanics of WCF RIA Services on their forums.
the Telerik team