Eclipse & classpath magic

Hey all.

I decided to learn a new IDE so I'm poking at Eclipse. I've too small
projects now, and just noticed something odd. Both projects have their
own name and live in the workspace directory. Just without thinking, I
put all classes in both projects in the package "local." The resulting
directory structure looks something like this:

..../workspace/Project1/local/[*.class][*.java]
..../workspace/Project2/local/[*.class][*.java]

Yes, both projects are quickies with a single class, so Project1/local/
has Semaphore.class and Semaphore.java, and Project2 has
CircularByteBuffer.class and CircularByteBuffer.java.

So here's my question: CircularByteBuffer uses the Semaphore class.
Since they're in the same package, I didn't have to use an import
statement, which confused me a bit because the two packages are in
different directory hierarchies.

So is this normal? I.e., a normal use of the default Java classloader?

I've never run into this situation before, where the same package is
stored in multiple directory hierarchies. It seems almost like a
security hole (because I could add, or replace classes in any package
just by adding a new directory to the classpath) but that's not my main
point.

I assume that Eclipse has added ".../workspace/Project1/" and
".../workspace/Project2/" to the classpath. Is that correct? And the
classloading is just normal JVM behavior? If there's any Eclipse magic
going on behind the scenes, I'm interested to know what it is.

Ok, excuse my noobishness. Thanks in advance!