The filter is called "bypass" because it takes a portion of the oil from the pressure feed, filters it and releases it into the pan. Therefore that oil bypasses the rest of the system.
The central tube in my filter canister has a very small hole to let the oil from the surrounding cartridge into the outlet tube. Some setup use a restriction in the supply pipe.
In general, the oil feed is taken from the pressure supply, sometimes from a Tee at the oil pressure gauge takeoff and the return line is attached to a fitting threaded into a hole in the block, just above the bottom of the block.
