As mentioned above, the proxied model data is actually stored in a controller's "content" field. So that snippet is actually just shorthand for {{#each controller.content}} {{/each}}
Exactly. I think this is where a good deal of confusion about the controller/model relationship is arising.
It's not quite a shorthand as the controller can have properties of its own as well. However, the general understanding is correct, the controller proxies to the content. The controller is not the data, but it acts like it.