An authorized-participant delivers the underlying basket to the fund and receives a creation unit, typically 10,000 to 100,000 ETF shares, or delivers ETF shares and receives the basket back. Because the exchange is available at nav, any gap between the ETF price and NAV becomes a low-risk arbitrage that the AP closes.
This is the entire reason an etf trades near fair value while a closed-end-fund does not. When the mechanism is impaired, by a halted underlying market or a suspended program, the discipline disappears immediately.
Example: the ETF trades at $50.30 against a $50.00 basket. An AP buys the basket for $50.00, delivers it, receives shares, and sells at $50.30. On a 50,000-share unit that is $15,000, less costs, and the selling pushes the price back to NAV.
Related: authorized-participant, nav, etf, premium-discount-to-nav, in-kind-redemption