Is this the mono touch using a C# interrupter or compiler to transfer the C# code to Objective C? But based on the Apple guideline, a interrupter or compiler application is not allow to submit on the AppStore. How is this magic going on? Thanks.
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Please see this press release from Apple in 2010 which states that they have removed the restrictions on tools used to create iOS apps. (Hat tip to @ShaChris23’s comment on this question.)
That explains why regular compilers are allowed – and as the other answers have explained, MonoTouch is a compiler, not an JIT interpreted/compiled language like Mono/.NET is on other platforms.