The three basic steps SDAs rely on are:
A publisher analyzes their first-party audiences and — along with their data management platform (DMP) — maps users to one of the IAB’s roughly 1,700 Audience Taxonomy categories. Publishers do this by using a standardized transparency schema called the Data Transparency Standard (DTS).
The publisher incorporates the segment ID for the associated taxonomy in their bid request via the ORTB 2.6 spec. The IAB recommends using Prebid.org header bidding integrations for passing SDA values, but alternative ways to achieve this exist.
The DSP gets the bid request, as well as the SDA metadata (the taxonomy Unique ID), and makes a decision whether to bid or not.