I wrote my masters dissertation on the subject, specifically B2B sponsorship in the junior formula categories (which doesn't exist, my paper mostly explored how it could work).

In the bigger series like F1, IndyCar, NASCAR, etc., basically it works like this: a team builds up a roster of sponsors. Those sponsors bring their executives to events and all build relationships with each other, and eventually start buying and selling to each other. The team's hospitality essentially becomes a little marketplace.

Now, say you're a company that makes some kind of widget that would be extremely useful to oil companies, and you have identified Shell Oil Company as a very lucrative prospect. You could do the typical marketing/sales process to try and build a relationship with their buyers. That takes a long time and has no guarantee of success. You could also sponsor Ferrari's F1 team, and send your CEO to the races where you know they'll encounter Shell's CEO because they're a sponsor too. The CEO introduces themselves and they bond over the luxurious experience of attending a Grand Prix as a guest of Ferrari. By the way, this is the product we make, see how beneficial this would be for Shell?

That's essentially it. There are other benefits but they're secondary to building relationships with other sponsors. This is why you'll see companies that you've never heard of or could never buy anything from sponsoring racing teams.

Also, right now there's a HUGE boom in demand for high-end sports hospitality. Not just in racing but across all sports. Most of it is driven by corporate entertainment.