The bot is loaded, and will play in lieu of a real human, calculating pot odds and making betting decisions based on these calculations. There is no way to accurately estimate the extent to which these bots are used.
The bot works through installing client software on a computer which interfaces with the poker room window, i.e. it is able to read what cards have been dealt, what bets have been made, etc. The bot's 'intelligence' ends there. Whether the bot wins, or not, depends on the poker ability of the actual person. The poker strategy needs to be programmed by the user, so the bot is only as good as its master.