No different than the interaction between MagicDNS & any other upstream DNS (Google, Cloudflare, your own, etc).
The built-in resolver at 100.100.100.100 handles the *.your-tailscale-suffix names in your tailnet and the rest that doesn't match goes upstream. Basically.
https://github.com/tailscale/tailscale/issues/2452 links to all the client commits.
There was also a lot of control plane stuff to let you specify config for different NextDNS profiles per tags/groups/users/etc.
And NextDNS improved some things on their side too, especially around passing device info to them.
And then, yes, we publicized it after working on it. And closed that bug.