How does ufw filter traffic?

I enabled ufw firewall with the following command:

$ sudo ufw enable
Firewall is active and enabled on system startup
$

Now while I look at the status:

$ sudo ufw status verbose 
Status: active
Logging: on (low)
Default: deny (incoming), allow (outgoing), disabled (routed)
New profiles: skip 
$

It says deny (incoming). But I cannot understand what that means.

Does it mean:

Deny any packet which is incoming. (i.e. Deny any packet which is incoming regardless of source and destination ip and port address)

If the above is true, then I am wondering how am i able to browse internet. Because there will be many incoming packets from web-pages I visit. If every incoming packet is denied then I should not be able to surf web-pages. But I am.

If the above was not true then, then does it mean that some specific type of incoming packets that will be denied?If yes, then what kind of packets?