From what I understand, the main processor (Broadway) shuts off, but the secret second processor, known as the Starlet or IOP (Hardware/Starlet - WiiBrew
), continues running IOS, the internal OS (IOS - WiiBrew
). IOS runs fewer modules during this time, one of which is the KD module, responsible for WiiConnect24 functionality. KD is responsible for downloading files placed in an internal download queue, which allows games to receive internet data while they are not running, and if standby mode is enabled, when the console is in standby mode.
IOS also has an STM module, which watches the power button, and loads boot2 (boot2 - WiiBrew
) when the power button is pressed, which then reloads IOS, and loads the Wii Menu.