Did I understand /dev/urandom?

I have been reading about /dev/urandom, and as far as I can tell, /dev/random creates cryptographically random numbers by taking advantage of several events like network packet timings, etc. However, did I understand right that /dev/urandom uses a PRNG, seeded with a number from /dev/random? Or does it just use /dev/random as long as there are bits -- and when they run out it falls back to some PRNG with a seed gathered from where?