What is the (function($)) for in MooTools Javascript

Question

I was reading a post by David Walsh on creating a sprite menu with MooTools. I am fairly new to MooTools, and I did not understand the way he opened his script. In particular, what is

(function($){
..
})(document.id)

Is it a type of JS closure?

Here is the full script if you don't want to follow the link:

(function($) {
    window.addEvent('domready',function() {
    $('nav').getElements('li').each(function(li) {
        //settings
        var link = li.getFirst('a');
        //fix background image
        if(!li.hasClass('current')) {
            link.setStyle('background-image','none');
        }
        //utility div
        var div = new Element('div',{
            'class': 'nav-' + li.get('id'),
            opacity: 0
        }).inject(li);
        //background imagery
        li.addEvents({
            mouseenter: function() {
                div.fade('in');
            },
            mouseleave: function() {
                div.fade('out');
            },
            mousedown: function() {
                div.addClass('nav-' + li.get('id') + '-click');
            },
            mouseup: function() {
                div.removeClass('nav-' + li.get('id') + '-click');
            }
        });
    });
});
})(document.id);

Answer 1

(function($){
..
})(document.id)

If you put a function inside (), JavaScript will automatically execute that function. By adding (document.id) he is also passing a parameter to that function. For instance..

(function(message){
    alert(message);
})( 'Hello World!' );

Would alert Hello World!

Answer 2

It assigns document.id (a function created by MooTools) to a local variable (named "$") of the anonymous function's scope.

Answer 3

It's an auto-executing closed function using Mootools "dollar safe mode".