How should one correctly deploy the ASP.NET MVC user management example?

Question

I apologize for the title of this question, because I don't fully 100% understand what I am even asking.

I'm confused with deployment details of the standard ASP.NET template. I'm using Visual Studio 2015 and I created a new Project using ASP.NET and MVC.

When I create the project, there's a template built out for me that already has user log-ins and password management set up.

When I look at the code, I can find the definition for the DBContext...

public class ApplicationDbContext : IdentityDbContext<ApplicationUser>
{
    public ApplicationDbContext()
        : base("DefaultConnection", throwIfV1Schema: false)
    {
    }

    public static ApplicationDbContext Create()
    {
        return new ApplicationDbContext();
    }
}

I can see there's an App_Data folder which contains an .mdf file. I'm pretty sure DBContext is connecting to this .mdf file somehow, but I think it's obfuscated by the IdentityDBContext.

So my question is: Do people usually just go with this .mdf file when they deploy? I had assumed, probably incorrectly, that one would need a standalone database instance that stores usernames and passwords.

I can see that there's ways to do user administration on the host machine. Is this typical?