The technique is to make it so that the destination/host the IP packets are going to isn't important. Say accessing a TOR hidden service - the IP address the packets are going to is that of any TOR node. To be useful, such an overlay network requires a different naming protocol (in this case, the TOR hidden service one), that allows services to have persistent identities without needing to publish DNS names or IP addresses.
Your traffic is still going to specific IP address(es), but this isn't useful for someone trying to censor, unless they can persecute those running TOR nodes and/or prevent access to all TOR nodes.
