To Burke: this is effectively a frequently asked question. The PalmOS version of Acrobat Reader is a split user agent. The desk top part pre-processes the file, including wrapping it up in the form of a PalmOS .PDB database, so that it can be used on Palm devices that don't have external memory cards.
The other pre-processing is to render images to bitmaps and to add tagging (information about the document structure) if it wasn't present in the original.
I believe seem other threads suggest competing products that do process native PDF files completely on the Palm system.