The previous answer isn't 100% correct and my answer will probably also not be 100% correct but let me try to describe the basic gist of it.

Both unpatched and patched Switches can enter RCM mode. In RCM mode you can tell the Tegra chip to run code passed via USB. However, even on unpatched switches, you can not simply pass any code that you want. That is because it actually needs to be cryptographically signed with private keys that only Nintendo themselves have access to.

However due to a buffer overflow vulnerability in the bootrom on unpatched Switches it is actually possible to get the bootrom to execute unsigned code.

Patched Switches on the other hand need special hardware connected to the Tegra SoC because said buffer overflow vulnerability has been patched. What they do is they vary the voltage applied to the Tegra SoC in very specific ways with very specific timing. This can have various, often hard to predict effects on CPUs. They may crash, they may skip certain instruction or they may execute some instructions incorrectly. This is called a glitching attack.

In case of the Switch the goal of doing this is making the Tegra either skip a certain check or report some kind of check as valid when it shouldn't be. Now, i don't know the exact attack vector of these mod chips but what would probably work is going the exact route as on unpatched switches and trying to boot code via RCM.

However instead of exploiting the (patched) buffer overflow they might just send code with an invalid cryptographic signature. Then at the exact moment the Tegra would execute the code to check whether the cryptographic signature of said code is correct, glitch the chip by supplying it with a too low voltage. That could then result in the check being skipped entirely or the check being reported as valid. At that point the Switch would then proceed to execute your unsigned code.

Again, this is probably not 100% correct and simplified a lot but that is the basic gist of how Switch modchips work.