The wen is what is in the eyes and the cap. It's a liquid substance that the fish produces and it's stored in the cap or eye bubble. If punctured, yes the cap will deflate. In healing, the cap will inflate again with wen. Like any injury you need to watch for infection. No, the cap isn't the goldfish's brains, 8O but it definately looks like it. An oranda is born without any wen and as it matures, the folds deveolp on its head and eventually get filled with wen.
Goldfish have been bred for like 1000 years or more. They started with a small carp fish and ended up with the many breeds you see today. Goldfish competitions are intense. Some call the goldfish "living art."
I'm hoping someone with more goldfish experience will chime in here. I read this stuff in a book a while ago, so I'm not 100% sure if it's accurate or up-to-date. :| However it should give a good approximation.