There are a couple different ways that it works. For Arcade or digital games, it scanned my Microsoft account and any of the compatable games that I had previously purchased were added to a "ready to download" tab on the Games and Apps page. I just approved the download and it went from there. For on disc games, once you put the disk in the drive, it then seems to download a digital copy of the game from the XBOX servers, rather than copy the game from the disc. You still need the disc in the drive after it downloads, like you would a physical XBOne game, but it reads from the hard drive only.