Raspi-config is a shell script in /usr/bin on Raspbian. In the version I'm looking at from a 2015-01-31 image, the "Advanced Option":

Enable/Disable automatic loading of I2C kernel module

Does a couple of things:

1. It checks /boot/config.txt for an uncommented line beginning w/ device_tree_param= or dtparam=. If it does not find one, it asks,

       Would you like the ARM I2C interface to be enabled?

If you do, it adds dtparam=i2c_arm=on to the end of /boot/config.txt.

2. It then looks for an /etc/modprobe.d/raspi-blacklist.conf, which does not exist by default. If it doesn't exist, it creates it, but leaves it empty. Then it asks,

       Would you like the I2C kernel module to be loaded by default?

If you do, it runs modprobe i2c-bcm2708 (i.e., loads the module) and deletes any line in that raspi-blacklist.conf file beginning with blacklist and i2c-bcm2708 or i2c_bcm2708.

If you don't, it adds blacklist i2c-bcm2708 to the end of that file if such a line doesn't exist.