The radiator is comprised of finned tubes that the coolant passes through. The heat from the coolant transfers to the tubes and fins. Air blowing through the radiator carries the heat away and into the environment. The heater core is comprised of finned tubes (well, a single tube bent in multiple zig-zags) that the coolant passes through. Air blowing through the core carries the heat away, but into the air ducts to heat the interior instead of into the outside environment. Still, the exact same function. The heater core is nothing more than a second, smaller radiator. It further removes heat from the coolant. What's impressive to me is that the factory gauge has the resolution to show the difference. I guess, while the displayed numbers are damned-near arbitrary, the response range is still a valid function.
Think of your motor like your body on a cold day. It takes more energy to keep it warm, and additional draw will drop the temps. It's not uncommon, especially if you are doing extended idling, or low speed driving. If it drops excessively, then maybe you have a thermostat on the edge of what it can maintain and the added draw on the system causes an overall loss of heat.