It works by retarding the ignition timing and adding extra fuel (and sometimes air) to balance an inherent loss in combustion efficiency with increased pressure at the charging side of the turbo.
ALS was first used in the early days of turbocharged cars in Formula One racing circa mid to late 1980s, until fuel restrictions made its use unsuitable.
Later it became a common feature in rally cars because of the increased turbo lag from the mandated restrictors at the intake manifold inlet.
This late ignition causes very little expansion of the gas in the cylinder; hence the pressure and temperature will still be very high when the exhaust valve opens.
The higher exhaust pressure and temperature combined with the increased mass flow is enough to keep the turbocharger spinning at high speed thus reducing lag.
An ALS working with a bypass valve feeds air directly to the exhaust manifold, where it is mixed with partially combusted gasses from the engine, thus igniting them again and spooling up the turbo.
[1] Another well-known application of this type of anti-lag system was in the WRC version of the 1995 Mitsubishi Lancer Evolution III and Toyota Celica GT-Four (ST205).
Besides the racing version, the hardware of the anti-lag system was also installed in the 2500 "Group A homologation base WRC method car" street legal Celica GT-Fours.
Like other types of anti-lag, overuse of this type of anti-lag can cause damage to the turbine wheel, manifold and more due to the violent pressures created when the air/fuel mixture spontaneously combusts from the heat of the turbine housing or is ignited by a very retarded ignition event (happening after the exhaust stroke begins) and can potentially cause popping/flames.
Modern Formula One power units are turbocharged, six cylinder engines in V formation, with an additional hybrid system.
During normal race conditions, the electric motor input power is gradually reduced, as the rpm increases and the exhaust gasses are able to sustain the desired boost pressures.
During qualifying laps and sometimes used strategically through the race, energy can be deployed to the MGU-H, even when the engine is running at high rpm.
This will provide a continuous combustion limited to the exhaust manifold which significantly reduces the heat and pressure loads on the engine and turbocharger.
With the latest anti-lag systems the bypass valve can not only be opened or closed but it can actually control the flow of air to the exhaust manifold very accurately.