They forward your encrypted VPN traffic over their servers onto Mullvad servers. They themselves can't decrypt the traffic, because it is encrypted using the wireguard to the public key of the mullvad exit node (verifiably). They also handle the mullvad subscription for you so you don't leave any data with mullvad. Basically mullvad sees your traffic, but not your originating IP address or PII and Obscura sees your originating IP, PII but never what traffic you send through the wireguard tunnel (except total bandwidth and rough shape).