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The basics:
The league has a commissioner and owners (the commissioner can also be an owner). The owners make changes - waiver claims, free agents, lineups, rotations, promotions/demotions, basically everything. They export their changes via the in-game menus to the league's server. The commissioner imports the owner's exports, simulates the league for a given length of time (sim length varies by league) and generates and uploads an update file for the league.
After that, the owners update the league file using the same in-game menus they used to export. Rinse and repeat.
Leagues have their own methods of communication. Usually a dedicated message board, slack channel or something similar. The owners use that to make trade offers and other such things. Again, what happens this way can vary by league.
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