Applications running in a Docker container see a single filesystem that they can read from and write to in the usual way for the operating system. The container sees a single filesystem drive but it's actually a virtual filesystem, and the underlying data can be in many different physical locations.
Files that a container can access on its C drive could actually be stored in an image layer, in the container's own storage layer, or in a volume that is mapped to a location on the host. Docker merges all these locations into a single virtual filesystem.
The virtual filesystem is how Docker can take a set of physical image layers and treat them as one logical container image. Image layers are mounted as read-only parts of the filesystem in a container, so they can't be altered, and that's how they can be safely shared by many containers.
Each container has its own writable layer on top of all the read-only layers...