How does tether on bitcoin work?

I've seen the news that Tether is integrating with bitcoin. But what does this really mean and how does it work? They say there will be both on-chain and lightning transactions. I can see how lightning transactions would happen if on-chain transactions can happen, but how can tether transactions happen on the bitcoin blockchain and how is this connected to the tether network?

I could imagine that maybe this is a colored coin kind of thing where the tether network monitors the bitcoin network for cross-network transfers. Is that basically what's going on?



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