An ABAP Compiler is a compiler, which creates a BYTE CODE also known as INTERIM CODE whenever an ABAP program is generated from the source code. This BYTE CODE or INTERIM CODE is stored in the database system being used by the SAP System.
A BYTE CODE is a collection of Statemets and are connected to C functions. Whenever the program is generated, the byte code is loaded into a program memory area (PXA) that is used to manage the generated byte code. The loaded byte code is finally interpreted by ABAP runtime environment.