In the winter...
Heat is absorbed from the ground or groundwater and carried to the geothermal unit via an underground piping system or well. The heat is transferred to the air, which is distributed through duct work similar to that used in any forced air heating system.

In the summer...
The unit provides central air conditioning by rejecting heat from your home. A portion of the heat can be used to produced hot water, while the remainder is pumped back to the underground piping or well system, where it harmlessly dissipates into cooler ground/water.