Japanese uses 3 writing systems - hiragana (think of it as the “default” system), katakana (used for loan words from other languages or onomatopoeia), and kanji (Chinese characters - used for nearly all type of words). Hiragana/katakana you can sort of think like an alphabet but each character is actually a vowel by itself or a consonant plus a vowel (eg ki, mo, ri). Building a word is just batching these guys together.

The IME takes input in hiragana (the type on the keycaps you see) and types out to hiragana by default, and detects what word you’re typing. You can then hit a key to make a drop down menu appear, so you can flip the hiragana into katakana instead or grab the correct kanji.

So for example, in default hiragana:

としょかんにいきましょう！ (Let’s go to the library!)

Will turn into:

図書館に行きましょう！

The IME detects the としょかん input as meaning “library” and will provide the proper kanji 図書館 in menu. However if you wanted it in katakana for whatever reason, it will also automatically offer トショカン as an option. Likewise for いきましょう (let’s go) the core word is いき -> 行き so it’ll swap in the kanji as an option.

So unlike Chinese typing you don’t build an individual character with a list of radicals plus handy autosuggests - it goes by word!