Metro team keeps improving its documentation, now you can find some really good explanations at https://facebook.github.io/metro/docs/concepts (link updated):

Metro is a JavaScript bundler. It takes in an entry file and various
options, and gives you back a single JavaScript file that includes all
your code and its dependencies.

So yes, it is a sort of Webpack, but for React Native apps 🙂

But where is the bundle file located?

Once the bundler is started, you can check its contents at http://localhost:8081/index.bundle?platform=ios&dev=true&minify=false
(like webpack, it is served from memory, so it is not being written on your project’s folder).

What is the use of that bundle file ?

This file is installed in the device for its code to be executed there. Remember that when you are writing code for a React Native application, your code is not “translated” to Java / Swift / whatever. The Native Modules will send events to a Javascript thread, and the JS thread will execute your bundled React Native code.