Ah! Excellent question!
Lots of soapers on here it seems so you'll probably get good responses. I always get excited when someone asks! It gives the soapers of the world a chance to educate!
In very general terms, yes, lye is caustic, but when added to water then your melted oils, the temperature raises very high. In turn what this does is "solidify" or saponify the molecules in the oils binding them together. Once this has happened, and it does this while in the mold, the lye actually burns off so there is no remaining residues. The longer the soap "cures" the more lye and moisture dissipates from it. You can actually use soap one week old, but it will melt into nothing. When I rebatch, this also tends to help the lye dissipate causing a more balanced bar of soap. You don't have to go to those extremes.
And don't make the mistake so many others do thinking that using glycerin is a "non-lye" product. In truth, glycerin is a by-product of soap. Hence, lye is still used.
This was where i came up with my assessment, and it isn't necessarily right mind you, just my way of thinking, I add E.O. or herbal extracts after the lye has dissipated and I re-batch. I don't want scent nor any therapeutic benefits lost due to being burned out during the lye process. Again, this isn't necessarily true. Its just my personal preference.
wanderingherb