Is it the x,y,z vector of the magnetic field lines at the current position?
Yes, in the sensor frame of reference. To get North (in the horizontal plane) from that measurement, you have to use the accelerometer to define the direction of down, and then do some math.
Here is a comprehensive application note with all the details: http://cache.freescale.com/files/sensors/doc/app_note/AN4248.pdf