MediaWiki has a notion of content (think mcs)
Parsoid takes that content (which in the routes.js it specifically calls wikitext) and renders it as HTML (but sets properties like inputContentVersion / outputContentVersion referring to the HTML)
There're also HTTP Content-Type headers in the mix.
See the discussions in https://gerrit.wikimedia.org/r/c/mediawiki/services/parsoid/+/461433/5//COMMIT_MSG#9