Student finds a job and works to earn the money. A student with work-study is eligible for jobs where their pay is subsidized; those jobs only hire students with work-study, so the students with work-study have a greater selection of jobs to seek. However, work-study jobs may not allow students to work more than their work-study eligibility (since the pay would no longer be subsidized afterward).
Of course, a student with work-study can also work at non-work-study jobs (and may choose to do so if the job or pay is better). The availability of work-study and non-work-study jobs on or near campus does vary by campus.