It guides you to fly the selected track. It will not track the radial.
If you move away from the radial by handling or over compensating, you will parallel the radial.
In practise, it does the job very well and provided you cross check with the needle from time to time, you will be fine.
To track the radial, you would need an FMS2 box with course out/radial in function - then you can define the radial and track it in NAV.