Hello,
I am using Arc Map 10.3. When I change coordinate systems by selecting Data Management Tools->Projections and Transformations->Project-> fill-out dialogs for XY and Z coordinate to change from State Plane Nad83 Us Feet, NAVD88 to a Geographic WGS84, WGS Ellipsoid; I believe ArcMap is performing both a transformation to a different horizontal datum and a projection from a flat grid based state plane system to an elliptical geographic system. Is my understanding correct or am I missing something.