The mile-high overview is this: When you leave the nested block, Python automatically calls f.close() for you.
It doesn’t matter whether you leave by just falling off the bottom, or calling break/continue/return to jump out of it, or raise an exception; no matter how you leave that block. It always knows you’re leaving, so it always closes the file.*
One level down, you can think of it as mapping to the try:/finally: statement:
f = open(filename)
try:
# My Code
finally:
f.close()
One level down: How does it know to call close instead of something different?
Well, it doesn’t really. It actually calls special methods __enter__ and __exit__:
f = open()
f.__enter__()
try:
# My Code
finally:
f.__exit__()
And the object returned by open (a file in Python 2, one of the wrappers in io in Python 3) has something like this in it:
def __exit__(self):
self.close()
It’s actually a bit more complicated than that last version, which makes it easier to generate better error messages, and lets Python avoid “entering” a block that it doesn’t know how to “exit”.
To understand all the details, read PEP 343.
Also if someone does explicitly close the file, will it have any undesirable effect ?
In general, this is a bad thing to do.
However, file objects go out of their way to make it safe. It’s an error to do anything to a closed file—except to close it again.
* Unless you leave by, say, pulling the power cord on the server in the middle of it executing your script. In that case, obviously, it never gets to run any code, much less the close. But an explicit close would hardly help you there.