But how does this work in practice? Are there trade-offs involved?
There are always trade-offs involved. In the case of quad-pixel and now nona-pixel sensors, the amount of color resolution is reduced from what one would expect to get from the full number of pixels.
For 48MP quad-pixel sensors that output 12MP when using binning, their color resolution is ...
Exactly the same thing happens if you downsize an image... the information from the "excess pixels" is combined. That's why all FF sensors of a given technology/generation will have essentially the same low light performance for the same size output image; regardless of their pixel count.