Nope, that's done with Javascript. I don't use Dreamweaver for any of my web work anymore and I don't have a copy in front of me at work, but looking at the coding it looks to be a very simple black-box function. Black-box in that it's not meant to be changed at all, it's supposed to "just work". But things don't always "just work", so it's always a good idea to look under the hood and see what sort of coding is going on, that way if something goes wrong you know how to fix it -- or at least what is the right direction to look.
In the header, you have this:
<script language="JavaScript">
<!--
function MM_swapImage() { //v3.0
var i,j=0,x,a=MM_swapImage.arguments; document.MM_sr=new Array; for(i=0;i<(a.length-2);i+=3)
if ((x=MM_findObj(a[i]))!=null){document.MM_sr[j++]=x; if(!x.oSrc) x.oSrc=x.src; x.src=a[i+2];}
}
//-->
</script>
That's the guts and, if you're unfamiliar with coding, what could be very confusing. Basically, it's simply setting up the code that you'd use in the body of the HTML...that's where you tell it what variables are put into the code above.
So in the actual body of the HTML, you have two things that are being influenced. The first is the larger image:
<IMG src="ph1.jpg" alt="" name=photo width="325" height="325" id=photo>
That tells it the initial image to be displayed. It gives the image an id (photo) so that it can be called to later on. There's another image that gets swapped out, called 'leg12.gif' - same code, basically, except it gets the id 'menu'. I'm not sure why it's called menu when it's really more of a description of the image than a menu, but oh well. The system doesn't care, as long as it's consistent. It just gets confusing to know what it is if it doesn't make sense...at least for me :)
Then, the thumbnail image has this code:
<img onmouseover="MM_swapImage('photo','','ph2.jpg','menu','','leg2.gif',1)" height="60" alt="" src="im2.jpg" width="90" />
What that does is call the script from the header (MM_swapImage) and, in a nutshell, tells it to take the image 'ph2.jpg' and put it in the id tag 'photo'. It also tells it to put the image 'leg2.gif' in the place of 'menu', or replacing the 'leg12.gif' image that was originally there.
That was extremely brief in explaining what the code is doing behind the scenes. I hope it made sense...as I said before, it's extremely important to have at least a basic knowledge of coding if you're going to do any sort of web development. The only thing the interface does (regardless if you use Dreamweaver, Expression, etc.) is automatically write code for you. So if something doesn't seem to be working, you can always go into the code and fix it.
I would highly recommend you pick up the Dreamweaver 8 kit (http://www.digitaltutors.com/store/product.php?productid=933&cat=50&page=1) because it goes into detail on how to do things like Swap Image, and other effects as well as taking you through the whole process of building a site from start to finish.
All that said, if you simply want to know how to do a Swap Image in Dreamweaver, here's a good article (http://www.peachpit.com/articles/article.aspx?p=31661&seqNum=5&rl=1) explaining how to do that.