How does this JavaScript syntax bit from Ember.js work?

Going through the tutorial, I've encountered this:

this.render(hbs`
    
      <ul>
      
        <li class="city">
          
        </li>
      
      </ul>
    
  `);

I thought backticks represented a string? What is hbs then? Is it a function that is receiving handlbars snippet as an argument?