Normally (when neither implement is being operated), the fluid flows freely through both the loader and aux valve. This is where the term "open Center" comes from. When the controls are centered i.e. not being operated, they are open between the in and out ports and fluid flows right through. At least this is how I remember it.
When you operate one of the valves, it diverts some portion of the fluid to the implement. The excess continues to flow through providing power, allbeit reduced in capacity, to the downstream implements.