You scan a contactless card and they do a £1 authorisation the first time you use it (on Amex at least, I've heard it is different on other card networks). They then total up the amount you use it and start settling it when you reach a certain point. This is because there are quite complex rules:
1. If you don't "tap out" of a tube/train journey, they charge you the maximum fare.
2. They don't know at authentication time where you are going. You could be doing a journey within an outer zone which would only cost £1.50 or you could be doing a journey all the way from zone 6 into zone 1 which would be, say, £5.60
3. Different fares apply peak and off-peak
4. There's a "price cap" that applies - so you can't go spend more in one day than the cost of an unlimited use one day travelcard that covers all the journeys, and you can't spend more in one week than the cost of an unlimited one week travelcard.
In practice what happens is you just keep using contactless and the system settles the payments up right pretty much all of the time. They've done some clever thinking to make it work.
The downside: now that people have the same card in multiple 'forms' (e.g. as an actual card, and as a virtual card on Apple Pay or whatever), you can't switch between then without breaking this complex set of rules in some ways. You can register an online account and all your contactless cards to it, but you can't then keep switching between cards (or between cards and virtual cards) without things breaking. You pretty much have to just choose one payment method (either a card or Apple Pay) and stick with it.
