It’s not deduplication in the classical sense. It doesn’t put a dedup table in memory. It’s just that the way the data is stored it can’t write the same data to your backup twice because it’s already there.
It’s kind of like putting things into a hash table. You just can’t create duplicates because it has to be stored in the same spot. Which, I just realized, is probably the worst way to explain this to someone who didn’t have a class on algorithms and datastructures… Sorry.