Exclude option vs. Entry Point in Webpack

If you have an entry point in Webpack, doesn't that mean Webpack will only bundle up and transform the files that are in that entry point or required by that entry point? That would then automatically negate or exclude the files that aren't required by that entry point file, correct? Why do you still need an exclude option in the loader config for the files in your node_modules? That isn't required in your entry point so I thought webpack would ignore those files altogether, or is there some magic I'm missing? If you don't have the exclude option, will loaders automatically just try to transform all your files in your project?

via mangocaptain