You're right, it's hard to explain without a picture. The wire is wound around the regulator in such a way that as the shaft turns wire comes off at one end of the big loop and winds onto the other end so that the size of the loop remains the same even though the wire is moving to lift/lower the window. I'll see if I can dig up a picture....
And as for how you keep it from from resproinging back into a birds-nest during installation - you have to not allow slack to develop between the regulator and the part you're working with inside the door. Once you get the wire under the clamps on the window itself, you're OK, they'll hold it while you finish routing the cable and you can slide the clamps along the wire to get the window position right.
If you buy a new regulator, it comes with the loop taped down to prevent unwinding, as in this picture:
http://www.midwest-bayless.com/p-21765-4462987-oe-window-regulator-left-fiat-x19-1977-82-oe-nos.aspx - but once that tape is off you have to be careful not to let it birds-nest before you even get it into the car. Ask me how I know.
(I have successfully replaced a frayed cable on an otherwise serviceable regulator, found wire close enough to the right diameter at a local Ace Hardware. The hardest thing about that is that you have to get the length of the cable just about exactly spot-on right because there's no length adjustment once it's on the regulator).