They lay down an oil screen on the existing asphalt and then spread a layer of rock/gravel over it and let the cars compact it and create the finished surface. It takes a number of weeks to develop into a good surface.
Most of the chip sealing done in California consists of:
1. Sweep the road surface.
2. Spread the "oil"--usually a polymer-modified cationic emulsion.
3. Spread the chips.
4. Compact with rollers.
5. Send the brooms over it again.
Condorita, paving industry professional (driving the oil truck, to "boost" the spreader)