Creatine allows the muscle to retain water. When you lift, you tear and rip muscle fiber. The water creates an environment that allows for quicker cellular repair of the torn muscle fibers, due to a higher volume of liquid pathway for the cells to move through. This is 100% scientific fact!
No, creatine does not build muscle. You will not "gain" muscle mass using creatine like you would an AAS. Creatine simply creates an environment that fosters muscular repair, and allows you to build greater muscular volume, than had you not used it at all.
This is about as simple an explanation as you're going to get.