[Haskell-beginners] (->) instance for ArrowApply and laziness

Hi all, Could someone help me understand how the (->) instance for ArrowApply works? It looks like this:

instance ArrowLoop (->) where loop f b = let (c,d) = f (b,d) in c

This models recursion for arrows and I need help understanding how it does that. I have a strong feeling it has to do with the magic value 'd'. I've read the Patterson tutorial but I still don't grok it. Thanks! -deech