The Displacement on Demand (DOD) system on late model GM's uncouples the intake hydralic lifter by use of a solenoid in the oil/lifter galley. The lifter body still travels up and down in its bore, but the lifter is uncoupled, and the valve spring tension keeps the plunger and pushrod in place. The DOD lifter also have a spring to keep tension on the plunger, much like a roller cam rev kit.The exhaust valve is still opening/closing to keep the cylinder from becoming an oil pump, but with no air/fuel mixture to ignite since the injector is shut off, the cylinder has no output. The coil still fires to keep the cylinder clean (valve overlap, exhaust manifold backpressure, etc). The 'puter modifies the timming curve and controls the advance/activation of the DOD engine/system.
The 4-6-8 Caddy used a different system. They uncoupled the rocker arm so that the rocker pivot would move from the center of the arm in coventional form, to the pivot point being at the valve. The lifter still moved the pushrod, and the rocker arm would move, but with the pivot point at the valve, no air/fuel entered the cylinder. The solenoid was mounted directly over the rocker arm in the valve cover. The biggest problem with the system was the Bendix computer. Lots of things have changed in forty years !