question about S-ON and ROMs

[goguvarra]

Hello,
I would like to root a friend's HTC Wildfire, which in the old days required deactivating S-ON feature but now people say it is no longer needed.
For my personal knowledge, how is this possible. I mean as I understand it s-on restrict /system to write permissions only, so how can you install ROMs which need to modify the /system when installing, or how can you obtain root since the "su" binary also needs to be placed into the system partition.

Thanks.