As far as I understood the product page and Werner Vogels' blog post[1] it does not run on file level, but on filesystem level. So you won't be able to access single files from within S3, but rather have whole disk images stored in Amazon S3, ready to be restored back to your local datacenter or to be mounted on EC2 servers.
Actually even lower level than that. iSCSI just makes a block device available over a TCP/IP network. You can use that block device however you like, write random data to it, partition it in to multiple volumes, use it as part of a volume group or disk pool, etc. The individual block device doesn't need to have a filesystem on it.
1: http://www.allthingsdistributed.com/2012/01/The-AWS-Storage-...