And it's not really correct, in the way that it is confussing as it can be.
Midi works with numbers. There are 128 note-values in midi. You need 12 per octave, so that means you can get over 10 octaves using midi.
Now, your keyboard sends a midi note-on message with one of those notenumbers indicating which note to play. This message is received by your module. Depending on the sound chosen, it will play a sample. Most modules I know can do layered sounds, and allow to play note values that are a certain number of 'steps' (half notes) lower or higher than the note received in the note-on message.
And, controllers with a transpose function, allow to change the note value that is sent whenever a certain note is pressed. Really advanced synths allow to do more complicated stuff, for example, each half note on the keyboard is set to a quarter tone. So playing a half step up on the keyboard resulst in just a quarter of a tone up in sound!
Hope that's clear. Jee, I'm smart.