Here Tone 1’s waveform (WG1) acts as an LFO on Tone 2’s (WG2). Because Tone 1 is lower in pitch, the two summed waveforms “beat,” pulsing in volume.
The booster, especially with its gain up, clips the tops (and usually bottoms) of the waveform into something like a pulse. The louder parts of each beat are clipped more than the quieter parts, so the width of the clipped pulse varies: simulated pulse width modulation.
The diagram uses Tone structure 4; structure 3 works too.
Diagram from the XP-80 Owner’s Manual, © 1996 Roland Corporation, reproduced for educational purposes. Credits & disclaimer.