Does ruby's object_id method refer to the memory location?

Question

Or does this method just indicate a unique integer that each object has?

Answer 1

It is a combination of many parameters, value, object type, place in memory.
More can be read here

Answer 2

It isn't a direct reference to the memory location and the "encoding" is specific to a particular Ruby implementation. If you can read C code, you may find it instructive to look at the rb_obj_id and id2ref methods in gc.c in the Ruby 1.8.6 source. You can also read more about the "encoding" in the "Objects embedded in VALUE" section of the partial translation of the Ruby Hacking Guide chapter 2.