docs: Add brief textual description of install/update mechanics

Author: doshitan

docs/how-it-works.md

@@ -9,3 +9,39 @@ Review [Copier's basic
 concepts](https://copier.readthedocs.io/en/stable/#basic-concepts) and [how
 updates
 work](https://copier.readthedocs.io/en/stable/updating/#how-the-update-works).
+
+But in brief, when you install a template `template-foo` for app `bar` a few
+things happen:
+
+1. The repository for `template-foo` is cloned to a local temporary directory.
+   - Note, the latest tagged version in the repository is checked out by
+     default. Overridable with the `--version` arg.
+1. The `copier.yml` file is read from the local `template-foo` clone, which
+   provides the configuration and parameters of the template (e.g., what
+   questions to ask the user).
+1. If there are template parameters that need answered (and they have not been
+   provided explicitly via `--data` args), the user is prompted for them.
+1. A `.template-foo` directory is created at the top-level of the project with a
+   `bar.yml` inside it, containing the version of the template used and the
+   answers to the parameters for the `bar` instance of the template.
+1. The files in the local clone of `template-foo` are iterated over and copied
+   to the project, with templates being populated with the provided answers.
+
+On update:
+
+1. The repository for `template-foo` is cloned to a local temporary directory.
+1. The version of `template-foo` currently used by the project is used to create
+   a create a fresh instance of the template with the current project
+   parameters, effectively a clean copy of the existing project as if it had
+   just been created from the template.
+1. This clean copy of the project is then compared to the actual current
+   project, and the diff recorded. Effectively capturing any changes that have
+   be made to the project outside of the template process itself, to re-apply
+   later.
+1. The latest tagged version (or value specified by `--version`) of
+   `template-foo` is then applied to the project, prompting for any new
+   parameters that need answers. Similar to the install process, though with
+   some special logic around deleted files, etc.
+1. `.template-foo/bar.yml` file at the top-level of the project is updated for
+   the answers to any new parameters and the updated template version.
+1. The diff of manual changes from before is applied.