When the pressure inside the cooling system increases above its psi rating, the pressure cap releases some of the coolant into the overflow tank. It does this by use of a spring loaded valve. Once enough coolant has exited the system to reduce the pressure, the valve closes again. This action allows the system to remain at the optimal psi while the engine is running. This is great for when the engine is running, but what happens when you turn it off?
As the engine cools down and the pressure in the system drops, the pressure cap allows the excess coolant in the overflow tank to return to the system by use of a second spring loaded valve. This second valve responds to the vacuum created in the system from the drop in pressure and pulls the coolant out of the overflow tank. Not only does this recycle the excess coolant to prevent air pockets in the radiator, but it also prevents the softer components of the cooling system, such as the hoses, from becoming crushed by the external air pressure.
When the fluid in the cooling system heats up, it expands, causing the pressure to build up. The cap is the only place where this pressure can escape, so the setting of the spring on the cap determines the maximum pressure in the cooling system. When the pressure reaches 15 psi, the pressure pushes the valve open, allowing coolant to escape from the cooling system. This coolant flows through the overflow tube into the bottom of the overflow tank. This arrangement keeps air out of the system. When the radiator cools back down, a vacuum is created in the cooling system that pulls open another spring loaded valve, sucking water back in from the bottom of the overflow tank to replace the water that was expelled.