It changes the shape of the orbit. Shooting sideways is hard (more atmosphere) but pushing it away from the center of the earth works too: The orbit becomes less circular and more elliptical. While the higher point (apogee) is further away than before, the lowest point (perigee) is closer.
Lower the perigee enough, and the satellite starts grazing the atmosphere. That's what really bleeds off energy, and causes the orbit to shrink overall.
> And how does that work in GEO?
I'm not sure. At that distance you can't rely on the same subtle destabilization, nor really hit it from any angle but "below".