Dota 2 Upgrading Items using the Courier

All items you own and possess on your hero, in your stash and on the courier are considered

When you purchased the Bracer, the items in your stash, your hero and your items on the courier are taken into account, so if you had a Gauntlets of Strength and a Circlet and you purchased a Bracer then only the recipe would be bought (and if your hero wasn't nearby, would automatically go into your stash). Basically all items you own and possess are considered when purchasing an item (items you have dropped do not count). In your example, only the cost of the recipe (~210g) would've been deducted and the courier would've carried the recipe to you which then combined with the others to form a Bracer.

From your stash to the courier

If the item is in your stash, you can have the courier bring it to you, and when it reaches you the item will combine into Bracer.

From the stash to you

If instead the recipe was in your stash when you returned to base, and you had the other components of the recipe, then the item will be combined and placed into your inventory.

Exception

If the courier had a component of the recipe when you returned it would not combine. Suppose you had a Gauntlets of Strength, your stash contained a Circlet and the courier had the Recipe. When you are near your inventory, the item would not combine for you

If you had a Gauntlets of Strength and Circlet and the courier wasbringing you the Recipe and you decided to drop the Circlet on the ground at your feet, the courier would just give you the Recipe (assuming there was room in your inventory) but it would not combine into the Bracer since you don't have all the necessary components. If you then had the Gauntlets of Strength and Recipe, and picked the Circlet up off the ground, it would combine into the Bracer

Basically, items formed by components / recipes will be combined automatically.

What happens is that courier buys the recipe for the upgraded item. Then when it hands the recipe over to you, since all three items are in your inventory (gauntlets of strength, circlet, and the recipe) it combines them all in to the Bracers

Source: DoTA player since 2005