A leak down tester treats your engine assembly like a "pressure vessel".
Lets pretend that the engine is a mounted tire. We fill the tire with air to check for leaks.
#1 is it leaking around the bead to rim seal?
#2 is it leaking around the valve stem?
#3 Is the valve core in the valve stem leaking?
#4 Is the rim cracked?
#5 Is there a nail in the tire?
I think you get the point.
It tests all of the barriers between the pressure that you apply and the outside of the "engine".
The "test" applies "air pressure" to the exhaust gasket,reed cage gasket,intake manifold to reed cage seal,cylinder base gasket,head gasket,both of the main seals,and the engine case itself(cracks,and the seal between the case halves.
The test could care less what engine parts are on the inside.