The strokes are recorded in 3D space wherever you paint them, but the projection is done during rendering and can be changed after the stokes have been painted. The strokes are projected (stretched) along whichever axis you choose so that you can change the terrain without the strokes becoming disconnected from the terrain. If you choose 3D projection, the paint only applies within the original strokes in 3D space and is therefore very sensitive to changes in the geometry you project it onto.