They mail you a small box in which you place only the Watch, no band or any other accessory. After they receive and inspect it, they will issue you a credit if you use your Apple Card to pay for the new Watch, or an Apple Gift card otherwise. The whole process is quite smooth for most (it was in my case), although some have reported here that they have received less than the projected amount for their trade-in device when they ordered the new Watch. Note that it is a third party that receives and scores your watch for its condition so their customer service should you have an issue with them is not necessarily up to Apple's usual standards.