When is .forward handled?

[MRob]

I was recently surprised to see .forward file in user's home dir being 
honoured in a context where mail is set to be delivered via LMTP to 
dovecot for final delivery. A response I got on the dovecot list implied 
that the MTA is responsible for this.

Does Postfix handle .forward just before it hands the message off using 
LMTP? How does this work? I wouldn't have expected this unless Postfix 
was doing the actual delivery, though it's not unwelcome - it's a mildly 
helpful feature but I want to understand how it works.