As I mentioned earlier, every change is written to the WAL in binary format (it does not contain SQL). The problem is this—the database server cannot keep writing to the WAL forever as it will consume more and more space over time. So, at some point, the transaction log has to be recycled. This is done by a checkpoint, which happens automatically in the background.
The idea is that when data is written, it first goes to the transaction log, and then a dirty buffer is put into shared buffers. Those dirty buffers have to go to disk and are written out to the data files by the background writer or during a checkpoint. As soon as all of the dirty buffers up to that point have been written, the transaction log can be deleted.
Please, never ever delete transaction log files manually. In the event of a crash, the database server will not be able to start up again, and the amount of disk space needed will be reclaimed anyway as new transactions come in. Never touch the transaction log manually. PostgreSQL takes care of things on its own, and doing things in there is really harmful.