Tokens are verified by intercepting API server requests in-cluster against a central root of trust. This is similar to how OpenID tokens from identity providers such as Okta or Active Directory are verified by destination web applications. This works no matter where clusters are hosted (including GKE/AKS/EKS or self-hosted clusters).
Great question! Most managed Kubernetes services don't support OIDC (and for EKS, which does support custom OIDC providers, it requires restarting the entire control plane to edit the configuration).
Infra runs a lightweight process in-cluster that intercepts requests and verifies them - and yes, this process intercepts requests and then impersonates the correct users and groups.