Some intro,
The Authorization token is JWT usually and is created with some secret key at the server, the library like https://www.npmjs.com/package/jsonwebtoken is used mostly in NodeJs. One can use different strategies using Passport JS to make it more secure and open for 3rd party integration (like Google, FB etc).
Now your question,
When the user initially logs into the system using his valid credentials, the server generate a JWT token with secret key and sends it in the response header. The client side (browser) saves this token in the cookie or local storage, and for the next request sends this token in the request header. The server has the secret key and can verify the token's validation and can proceed or decline the request.
One should ideally use a token that expires in 1 hour (depends on use case) or so and not use non-expiring or long expiry tokens for security reasons.
This is roughly how it works, please let me know if any doubt.