Execution within the BizTalk 2006 BRE follows an interesting paradigm. It took me a while to sort it all out as I'm not familiar at all with rules-based programming or anything of the sort. One of the things that tripped me up the longest was the notion of a FactRetriever.
A FactRetriever is a class that attaches to a policy and is in charge of making sure that when the policy runs, it has all of the facts that it needs in memory. Use of a FactRetriever allows fine control over when and how things are done - instead of just letting the BRE connect to a database, you can craft DataSets however you'd like (build it in memory, call a stored procedure, etc.) and assert those into memory as facts.
The heart of the FactRetriever is the UpdateFacts method, which is called every time the policy it is attached to is run. One of its parameters is object FactsHandleIn, which has a name that doesn't make it too obvious as to what it does. Additionally, UpdateFacts returns object FactsHandleOut. These two objects give you a lot of flexibility in how you'd like to control fact retrieval.
It's this simple: The first time the policy is called, when UpdateFacts is called, FactsHandleIn is null. Whatever you choose to return as FactsHandleOut is passed in as FactsHandleIn when the policy is called again. If the service/host instance/machine/etc. is ever restarted, a null will be passed in again on first calling.
This doesn't sound all that great when you first hear it, but it's a nice way of letting the BRE persist anything you want in memory to be used as a "hint" to the FactRetriever that you want to do something. For example, a great use of the BRE is as a local, in-memory cache of a DataSet. You can control the refreshing of this cache by passing a DateTime around as FactsHandleIn/Out, and using some custom logic in UpdateFacts to determine whether or not the data should be retrieved and re-asserted into memory.
You can use FactsHandleIn/Out for anything. A DateTime is a common use. I imagine that you could think up a great use for just about any kind of objects as a FactsHandle. This is one of those places where I'm sure someday I'll run across a really ingenious use of some strange object to perform a cool task.