There's a small diaphragm in there. When enough pressure is applied it pops out momentarily and let's the caliper lose grip of the disk and thus the anti-lock... Its not extremely effective. I used to work at a scooter place and out 150s had these. I put one on our shop scoot and the brake would stutter if you slammed on it.
It's just 'in line' like a filter. You can keep it or chunk it. You would bleed as you normally would if you keep it. (edited)