OAuth has several flows, one for browser based application uses a standalone authentication application referred to as an identity provider. The web applications redirect unauthenticated requests to the identity provider to login. Once logged in the identity provider returns an authentication cookie to the browser, then redirects the browser back to the original web site passing a token. The original web site receives the token, validates the token, and uses the token to create an authentication cookie of its own.
At this point the browser has two authentication cookies, one from the identity provider site and one from the original web site. If the user goes to a second SSO web site, the same process happens. The browser is redirected to identity provider. But this time the browser already contains a valid authentication cookie form the identity provider. The browser passed the cookie to the The identity provider which reads the cookie redirects back to the second SSO web site passing a token. Logic in the second site reads the token and creates an authentication cookie for the second SSO site.
Another way to do SSO in IIS is sharing an authentication cookie. Keep in mind, this approach has nothing to do with OAuth.
https://learn.microsoft.com/en-us/aspnet/core/security/cookie-sharing?view=aspnetcore-8.0
OAuth has several flows which are well documented.
https://learn.microsoft.com/en-us/entra/identity-platform/v2-oauth2-auth-code-flow
The OAuth flows are determined by the client type that require authentication. The link above covers the flows.