How does the Python interpreter handle the creation of a new class during execution?

When a class definition is encountered in Python, the interpreter performs the following steps:

1. A new dictionary is created to store the class attributes and methods.
2. The body of the class is executed as a normal block of code, with all function and variable definitions added to this dictionary.
3. After executing the class body, the metaclass (by default type) is called, passing the class name, a tuple of base classes, and the attribute dictionary.
4. The metaclass creates the class object, which is then assigned to the class name in the current scope.

Example:

class MyClass:
    x = 10
    def method(self):
        return self.x

Here, MyClass is an object of type type, dynamically created during execution.