the decomp connects to a tiny passage inside the side of the cylinder near the top. this goes to a little chamber where the valve sits. when you pull the starter clutch, the valve is in-line with the starter cable, that pinches it and pushes the valve in, opening it. The pressure above the piston in the cylinder is mostly blown out the hole, through the open valve, and out a little port hole in the bottom left of the cylinder. That makes it much easier to pedal it while holding the starter since the compression is what you're pushing against, but it also it can still run while the decomp is open , at much lower power, just to get it started.
The problem is over time oil builds up in the passage before the valve, or leaks out around the valve, etc etc, sometimes debris can get caught in the sealing surfaces or the spring to return the valve to seal gets weak or heated and loses strength. All these usually compound, a little oil leaks out over time, the valve gets sticky and it sticks a little open, more crud, more sticking, burns etc. You can clean it all out, and usually get it to work OK again, they rarely need lapping - that's more for 4 strokes especially exhaust where you're opening and closing every revolution under a lot of heat; wheras this is kinda hanging a bit open til it gets gross. Usually just needs a good cleaning and maybe new return spring. might need to scrape carbon buildup off the mating surfaces, then lapping will help smooth it again
They'll still run even with a pretty big decomp leak, just not as well, it presents as sortof a 4 stroke sounding stutter at top speeds, usually well below what the top speeds should be, and it doesn't respond to jetting. like it sounds and feels almost like it's 4 stroking up top even if it's lean. it'll also usually require the idle to be very far in. You can also tell if it's leaking because theres a buncha oily junk on the hole under the cylinder, though that can be misleading, oil will wind up down there anyway over long enough time just from regular starting.
Usually the best solution is to remove the valve assembly and plug the hole with a bolt. you need a bolt that sits all the way in and plugs the bottom of the hole, you can have too short a bolt and bottom out the bolt before it plugs the bottom, allowing it to blow by and out the exit anyway. As mentioned it can get harder to start but even with a D cylinder or a kit it's not enough compression you can't just start it anyway. plugging it cures a common problem and makes the starter cable much simpler. one less thing to fail.
I don't know anything about any scavenging to the exhaust, not sure that's real, but I am sure that blocking the decomp doesn't hurt anything.
TLDR: the decomp opens a valve when you pull the starter and allows pressure in the cylinder to blow out a hole under the cylinder. It makes it easier to turn the engine over for starting but can leak and get progressively worse, plugging it is a simple effective solution