I think I have a grasp of this, but I want to see if I'm understanding it correctly.
If a file which appears in my Local Vault View is checked in, then I'm looking at the file actually in the vault - the same one that's available to all the other users.
If a file which appears in my Local Vault View is checked out (by me), then I'm looking at a copy of the file in the vault, which is actually on my local machine.
If my understanding is correct, then when I've checked out a file, copying another file (of the same extension and file name) over the one I'm seeing in my Local Vault View would actually be replacing the copy on my machine. If I then checked the file in, the new file (even if it's very different from the original) would go into the actual vault as the next version of that file. If I instead performed an 'un-check out', my newly copied file would be discarded.
I hope the foregoing is correct, because it means I may have a reasonable strategy for mass-importation of our files into our vault, which would be a major coup.