Like the BeanFactory in java:
In the much more common case where the BeanFactory itself directly creates the bean by calling its constructor (equivalent to Java code calling new), the class attribute specifies the class of the bean to be constructed. In the less common case where the BeanFactory calls a static, so-called factory method on a class to create the bean, the class attribute specifies the actual class containing the static factory method.
Note:it's not the factory method
$instance = new FactoryClass();
The $instance
may be any class instance dynamically