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How does the Openfire interceptPacket function's processed flag gets set to true?

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I mean which function in the Openfire code invoke the interceptPacket function and how does it know if the packet has been processed or not?

Signature of function- public void interceptPacket(Packet packet, Session session, boolean incoming, boolean processed)

I just can not understand what is meant by processed? I only know that a packet is processed when it is read by SocketReader(one, when the packet enters the server(incoming==true) and one when it leaves the server(incoming==false)). But I want better insights of processed and incoming flags. What is their(incoming and processed) significance?