Help me understand this Scala code: scalaz IO Monad and implicits

Question

This is a followup to this question.

Here's the code I'm trying to understand (it's from http://apocalisp.wordpress.com/2010/10/17/scalaz-tutorial-enumeration-based-io-with-iteratees/):

object io {
  sealed trait IO[A] {
    def unsafePerformIO: A
  }

  object IO {
    def apply[A](a: => A): IO[A] = new IO[A] {
      def unsafePerformIO = a
    }
  }

  implicit val IOMonad = new Monad[IO] {
    def pure[A](a: => A): IO[A] = IO(a)
    def bind[A,B](a: IO[A], f: A => IO[B]): IO[B] = IO {
      implicitly[Monad[Function0]].bind(() => a.unsafePerformIO,
                                        (x:A) => () => f(x).unsafePerformIO)()
    }
  }
}

This code is used like this (I'm assuming an import io._ is implied)

def bufferFile(f: File) = IO {   new BufferedReader(new FileReader(f)) }

def closeReader(r: Reader) = IO {   r.close }

def bracket[A,B,C](init: IO[A], fin: A => IO[B], body: A => IO[C]): IO[C] = for { a <- init
      c <- body(a)
      _ <- fin(a) }   yield c

def enumFile[A](f: File, i: IterV[String, A]): IO[IterV[String, A]] =  bracket(bufferFile(f),
          closeReader(_:BufferedReader),
          enumReader(_:BufferedReader, i))

I'm now trying to understand the implicit val IOMonad definition. Here's how I understand it. This is a scalaz.Monad, so it needs to define pure and bind abstract values of the scalaz.Monad trait.

pure takes a value and turns it into a value contained in the "container" type. For example it could take an Int and return a List[Int]. This seems pretty simple.

bind takes a "container" type and a function that maps the type that the container holds to another type. The value that is returned is the same container type, but it's now holding a new type. An example would be taking a List[Int] and mapping it to a List[String] using a function that maps Ints to Strings. Is bind pretty much the same as map?

The implementation of bind is where I'm stuck. Here's the code:

def bind[A,B](a: IO[A], f: A => IO[B]): IO[B] = IO {
  implicitly[Monad[Function0]].bind(() => a.unsafePerformIO,
      (x:A) => () => f(x).unsafePerformIO)()
}

This definition takes IO[A] and maps it to IO[B] using a function that takes an A and returns an IO[B]. I guess to do this, it has to use flatMap to "flatten" the result (correct?).

The = IO { ... } is the same as

 = new IO[A] {
  def unsafePerformIO = implicitly[Monad[Function0]].bind(() => a.unsafePerformIO,
      (x:A) => () => f(x).unsafePerformIO)()
  }
}

I think?

the implicitly method looks for an implicit value (value, right?) that implements Monad[Function0]. Where does this implicit definition come from? I'm guessing this is from the implicit val IOMonad = new Monad[IO] {...} definition, but we're inside that definition right now and things get a little circular and my brain starts to get stuck in an infinite loop :)

Also, the first argument to bind (() => a.unsafePerformIO) seems to be a function that takes no parameters and returns a.unsafePerformIO. How should I read this? bind takes a container type as its first argument, so maybe () => a.unsafePerformIO resolves to a container type?