Yep DAR think of it as the oppersite end ie none aircraft end to your transponder.
As soon as you turn it on it starts pulsing a very weak UHF pulses to anything that will listen. When they reply as your transponder does to ATC it works out the distance.
So ATC sends out a pulse and your transponder replys, and DME the aircraft sends out a pulse and the DME transponder on the ground replies.