Hi Andy,
Rick's explanation is succinct enough,
Plus, there is a fair amount written in the professional literature (on continuum subtraction) available online.
I was reading an interesting whitepaper on the subject a couple of months ago which detailed the process of using RGB (or UGRIZ, whatever) channels rather than wasting time with dedicated offband filters. I just tried to dig it up again but haven't managed to find it.
As Rick indicated, it is by no means without issue but does have some advantages over software solutions that rely on detecting stars by their guasian profile, the main one being that the end result isn't confused by such things as shock fronts, double stars or other imaging artifacts. It is also effective for pulling out emission line sources from the spiral arms of galaxies, etc)
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