I’m not going to go into too much detail about this because there are so many websites that cover this better than I ever could (which I have listed below).
Basically a geothermal system is made up of a heat pump, ground loop(s), and either ductwork or a radiant system to heat/cool your house. A heat pump is just a refrigerator that can reverse between heating and cooling. If the heat pump is connected to ductwork like a furnace would be it will be able to both heat and cool the air as it is blown over the heat pump’s coil. If the heat pump is connected to a radiant floor or baseboard system it acts as a boiler by creating hot water but it can’t provide cooling or dehumidify the air.
The heat pump is connected to an underground loop filled with water or a water-refrigerant mixture via a heat exchanger. A common misconception is that the water/refrigerant mixture in the ground loop is what actually runs through the heat pump but that is not the case. They are completely separate loops that don’t mix. Ground loops can come in many styles (which I’ll go through in Part 4) but the most common style today is a vertical bore closed loop system. The whole system works off the fact that below the surface the Earth’s temperature stays relatively constant. Because of this the ground loop is able to absorb or reject heat to the Earth. Even though the temperature difference between the ground and the water/refrigerant mixture might be small heat will still transfer.
Below is a list of websites & a helpful video you can go to for more information on how a geothermal system works: