First, factor consists of indices and levels. This fact is very very important when you are struggling with factor.
For example,
> z <- factor(letters[c(3, 2, 3, 4)])
# human-friendly display, but internal structure is invisible
> z
[1] c b c d
Levels: b c d
# internal structure of factor
> unclass(z)
[1] 2 1 2 3
attr(,"levels")
[1] "b" "c" "d"
here, z has 4 elements.
The index is 2, 1, 2, 3 in that order.
The level is associated with each index: 1 -> b, 2 -> c, 3 -> d.
Then, as.numeric converts simply the index part of factor into numeric.
as.character handles the index and levels, and generates character vector expressed by its level.
?as.numeric says that Factors are handled by the default method.