The diagram, on the left side, represents the internal model of the Real World held by the Application and shows, on the right side, the Application monitoring and controlling entities in the environment.
Certain classes have instances which have or will have a physical manifestation of some sort, as an entity. A change in one of these instances (or more accurately, in xUML terms, a change in a fact which is an attribute of a class for a given instance) must be enforced on that corresponding entity in the Real World.
Similarly, if a property of a particular entity changes in the Real World the corresponding fact in the model also changes and may be detected by the application immediately (by means of an event) or used later.
These changes are made real by the Application’s interface to the hardware in the form of sensors (detectors) and actuators. How this happens is the subject of design.
The example shown is for a real-time system but the same principle of operation holds true for other applications such as banking systems but the effects are delayed and so occur less directly.