diff --git a/README.md b/README.md
index 76f3ed924..1bb538f06 100644
--- a/README.md
+++ b/README.md
@@ -45,10 +45,13 @@ pytype repo.
 
 ## Format
 
-Each Python module is represented by a `.pyi` "stub". This is a normal Python
-file (i.e., it can be interpreted by Python 3), except all the methods are empty.
+Each Python module is represented by a `.pyi` "stub file".  This is a
+syntactically valid Python file, although it usually cannot be run by
+Python 3 (since forward references don't require string quotes).  All
+the methods are empty.
+
 Python function annotations ([PEP 3107](https://www.python.org/dev/peps/pep-3107/))
-are used to describe the types the function has.
+are used to describe the signature of each function or method.
 
 See [PEP 484](http://www.python.org/dev/peps/pep-0484/) for the exact
 syntax of the stub files and [CONTRIBUTING.md](CONTRIBUTING.md) for the