I believe the software actually adjusts the 0's and 1's making for the color changes. For example if an image pixel is 0000001 and is red, the software takes that pixel and changes it to 0000000 for white or 0000011 for black or something similar.
That is a very rough way to explain it but I believe that is what it does. And that is looking at the image at the pixel level. When you do an entire image, the software most likely automates this so that thousands to millions of pixels can be adjusted simultaneously.
Though I could be mistaken. I am not a software programmer. So take this tongue in cheek.
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