The two heater hoses coming from the engine must always pass coolant or engine will over heat, it is the way the system is designed.
This is different than systems that just had 1 valve on 1 heater hose, in these systems the heater core is not part of the cooling system and flow between the two hoses could be shut off.
The 4 hose by-pass/diverter can be an "on/off" or a variable flow, the important thing is the coolant is always flowing between the two engine hoses.
So the valve can send some or all of the coolant to the heater core, but return flow to the engine doesn't change.
If heater core ever gets clogged even partially then you would notice that engine temp would go up when heater was on, this is because return flow is reduce by clogged heater core.
This is counter intuitive since you would think heater being on would reduce engine temp, lol.
But with this type of set up turning off heater, opening by-pass, restores full flow between the two engine hoses.
On my '94 with 4.0l and A/C, there are no valves, just two hoses directly to the heater core, heater is turned on by opening the blend door inside the cab