Clip on the cell terminals and it drains that cell. It's pretty slick. And yes, you can do this while the whole battery is charging.
BMS balancing happens after 3.4Vpc, but it's not very strong. This bleeder really helps get them all even. It doesn't take long, and you need to do it at high-knee - watch the cell voltage with your bms app and remove it when it gets down to what the other cells are. You can balance them all to be the same. I have done this several times and they stay very well balanced - mine are not super grade-A cells, and I don't charge past 14.2 volts.
You can also charge one cell the same way, to boost it up to equal the others. Use 3.65 volts on a power supply. I just found the bleeder to be much easier to manage.