Both gears float on the output shaft shown and are driven via mating gears connected to the input shaft with 1st gear on the left and 2nd gear on the right.
Drive is taken up when the drive ring on the right moves left and connects with 1st gear. Overrun backlash is taken up when the drive ring on the left moves left and connects with 1st gear.
To change into gear, the unloaded drive ring on the left is shifted through into 2nd gear, while still driving in 1st. As 2nd gear is rotating faster, drive is only handed over when the drive faces connect. At this instant, drive is relieved from 1st gear and to complete the shift, the now unloaded drive ring on the right is shifted through to take up overrun backlash in 2nd gear.