Here's how it would work: macOS already works with more than one CPU core. What if several of those cores just happen to be for a different architecture? When an app is launched, it would read the executable's header and schedule the app to run on the appropriate CPU. Things like producing sound, drawing to the screen, or getting user input is all done via the OS anyways; it doesn't really matter what architecture the app or OS is on, thing would just get translated, like how communication is being shipped over the bus with this protocol.
To me, it seems like the T2 chip is the real processor of newer Macs and the x86 chip is just some co-processor that the T2 chip offloads a bunch of work to. The T2 controls many of the internal components already and the x86 chip must interact with the T2 chip to interact with said components (e.g. booting, webcam, audio, SSD, etc). It will be interesting to see if this is the route that Apple takes with a supposed ARM transition.