Really depends on the circuit but for all practical simple purposes it turns the LED on and off. That can be done several ways. Pulses from a clock or other source is one method. The LED can be turned on and off for equal periods or on a short time and off longer time. Your question is a little open ended with several answers.
LEDs can be made to blink by applying a low frequency square wave to its terminals. You can use 555 timer IC to make LEDs blink or stuffs like that >_>