My question is basically what the title says:
If browser do not understand angular, why am I seeing angular while inspecting element in spite of using AOT (no angular compiler in the browser)?
Is there anyway to see the DOM with pure html elements?
E.g.
Why do I see <k-dialog> element, when using kendo dialog which is angular component? Are these elements simply ignored or are they div under the hood?

What you're seeing is standard HTML, because HTML5 allows custom elements:
https://www.html5rocks.com/en/tutorials/webcomponents/customelements/
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