Tom,
Did you work through the tutorial I suggested?
I've just finished going through it. This is the first time I've used the repeats, codas, etc and it took me about 15 minutes.
These are my observations from the exercise...
1. Performances are always linear and like an orchestra or a jazz group, etc., BIAB plays linearly from the start of the song to the end of the song. In this regard, BIAB is not like sheet music. As I see it, sheet music is a navigational, notational summary of a song while BIAB is the linear performance of a song.
2. Even when the different forms of repeats and partial repeats of a section are enabled in BIAB, BIAB still performs linearly. It's just that the display of the music is pulled together so that it represents sheet music format. This is what Dave is meaning.
If you haven't yet done so, I encourage you to open "Miles1 Tutorial (no repeats yet)" in BIAB and follow the instructions in the tutorial. After doing that, I think you'll see what I mean when you use the Fakesheet button as suggested in the tutorial.
To see how the 'insert bars' work, try this exercise...
1. Make sure that the Fakesheet mode is enabled by selecting the top option as shown below (that is, "Display chord sheet in fake sheet mode").

2. Start a new song (File | New). The chord sheet will be 32 bars long with C in bar 1.
3. Enter an 8-bar chord progression.
4. Right-click on bar 8, and select "Repeat/Codas/1st-2nd Endings".
5. Follow the 1, 2, 3, 4 on the image below.

6. After you've clicked on "Ok, Make Repeat" click on the "Fakesheet" button again and deactivate the top option "Display chord sheet in fake sheet mode".

What you'll now see is your original 8-bar chord pattern repeated in greyed-out bars 9 - 16. This is what BIAB will be playing once the song is generated. To this end, the process has automatically created the bars that BIAB will need for playback. For visual convenience, though, once the Fakesheet mode is enabled, the performance will take on the appearance of sheet music.

A number of different kinds of repeats can be defined in a single song.
Overall, what BIAB does is to take sheet-music-like instructions and convert them into performance-styled linear playback. The Fakesheet toggle allows the view to be in the style of sheet music or a linear performance. At the end of the day, just like Dave said, the same number of bars will be used whichever way you go.
Hope this helps.
Noel