This looks like the Intel stock fan and heatsink. These are not known for their efficiency, but they are doing the job well enough in most situations.
Intel cooling fans are not working like many other third party heatsinks (those most of us are familiar with) : on Intel heatsinks, everything is based on keeping the fan speed as low as possible (because they're always awfully noisy at high speeds). So when you load your CPU, the system will let the temperature rise to a certain value which sounds crazy to many hardware enthusiasts but which are perfectly fine for the components. It is not unusual to see the core temperatures (those given by core temp) vary between 80 et 100°C. Once the temperature has reached this range and if it continues to rise, then the system will make the fans spin faster to keep temperature in the range.
About the temperatures, Intel always gives the Tcase in its datasheets : this theoretical value is a measure taken by a probe located at the center of the socket, in contact with the bottom of the CPU case. This value is sometimes called CPU Temperature by some hardware monitoring tools. Most of hardware enthusiasts don't use it as a reference, because it's not very representative to what really mater in a CPU. Note that fro my memories, most of the motherboard controlled fans (Intel one for instance) use this value for the regulation. Most of people using third party heatsinks usually disable this regulation, choosing low noise fans and letting them run always at full speed.
The other temperature that matter here is Tcore, which is reported by probes directly implanted in the chip scilicium. This values quickly react to the CPU load variations and reflets what is really happening inside the CPU. With powerful cooling systems (watercooling, or even better), it is not unusual to see big differences between Tcase and Tcore, because these systems are very efficient at pumping the heat out of the CPU case, but the thermal interface between the chip and the case is less efficient. Anyway, the maximum value of Tcore is called Tjmax (maximum junction temperature) which is the maximum value that transistors inside the CPU can tolerate before failing. On Intel CPUs, this value is usually 100°C for desktop CPUs, 105°C for laptop/mobile CPUs (this value can be higher on other hardware, up to 115°C in some GPUs and even 125°C for the MOSFET used in VRM).
When the Tkmax is reached, the CPU will start throttling itself by reducing both it's frequency and it's voltage reduce the heat produced inside the transistors which means that the cooling system is not efficient enough to remove all the heat produced at the current settings. This is when you really have to worry about your temperatures.
Note that modern Intel chips are programmed to stay under a certain TDP value (which means more or less the amount of heat they will dissipate) by adjusting their frequency and voltage. So if a heatsink/fan is designed to handle the CPU TDP, it should always be able to dissipate all the heat produced. If there is some room to increase dissipation (very efficient cooling, or just low temperatures), the CPU will rise its performance (which is Turbo Mode). If the load is high and complex, and then the CPU dissipation exceeds the TDP, the CPU will reduce its performance until it reaches the minimum value it is rated for (base clock). When the base clock is reached, if the dissipation is still too high, the CPU will start overheating and then enter in the throttle mode I mentioned above. At some point, if it can't reduce more it's frequency and voltage, the CPU will shut itself down which will result in a system freeze.
Now I realize that I wrote a lot ... I hope I didn't lost you and that I was clear enough in my explanations ...
