Is C# code compiled to native binaries?

No.

Like Java, C# is compiled to an intermediary language (called MSIL or CIL).

Unlike Java, the IL is stored in EXE files which have enough actual EXE code to show a dialog box asking users to install .Net.

C# compilation is done in these two steps :

1. Conversion from C# to CIL by the C# compiler

2. Conversion from CIL to instructions that the processor can execute.

A component (just in time) performs this compilation at run time from CIL to machine code

What that .exe is supposed to tell you is that the file is executable. C# is compiled into bytecode, just as java is, but .NET wraps this in a CLR executable.

Look here for a more in depth look at CLR executable http://etutorials.org/Programming/.NET+Framework+Essentials/Chapter+2.+The+Common+Language+Runtime/2.2+CLR+Executables/