Percolated water from each soil layer flows into the next layer, and water flowing out of the last layer is lost to the part of the soil we are simulating. When the calculation of percolation is finished, the simulation makes two checks. First, it checks that no soil layer has an amount of soil water above its porosity, because that would be impossible. If any soil layer has more water than it can hold the extra water is passed back up the soil profile until the top soil layer is reached. If the top soil layer has more water than it can hold, the extra water is assumed to be sitting pooled on top of the soil.
Lateral flow moves out of the soil patch and is lost to the system.
However, the soil patches are completely separate so far.