Well, theres a few methods, depending on when the mod was released.

The early mods mean you had to unpack the .pack files, then replace them, while renaming the extension of the .pack files.

Now we have mod manager, what that does is modify the order in which the .pack files are loaded.

Imagine the game comes with file a, b and c at release.
They then patch a with some balance infomation (so instead of a 5, its now a 6 for example)
You then download a mod which adds stuff to the file (new unit for example)

Now, the game by default loads in order of release packs, patch packs then mod packs. If a file is in a later pack, it overwrites previous ones.

Aside from that, there is simple editing like a new startpos.esf, which is simply a backup and replace.

Im not sure of a lot more, or even if that is 100% correct, I havent had any time to even play a mod yet, apart from my own testing.