There is a brass weight held up by a spring which blocks off holes in the damping circuit effectively locking it out. When you hit a bump the weight gets knocked downwards uncovering the holes and allowing the oil to flow and the suspension gets unlocked. As the ride smooths out, the weight moves upwards and locks the suspension out again.
On some models the weight doesn’t cause the suspension to be locked out, but instead there is just a lot of compression damping. So the suspension works but is stiff until you hit the bump when it becomes fully plush.
I’ve had quite a few of these from the original Epic in 2003 to a 2009 Epic and a 2007 Stumpjumper. I think it works really well and current models allow you to change the threshold at which the weight moves and the suspension becomes active. Do bear in mind though that the activation is based on g-force so riding slowly will rarely activate it, and riding in mud will often not generate the forces necessary either. I tend to change the threshold when riding in soft conditions to account for this.
Hope that helps!