Yes, it goes down the shaft (air and solvent) and because it can't go past the clubhead it fills the shaft with air. So the only escape for the air pressure now is between the shaft and the grip and out the grip small end. Once the air makes it's way between the grip tape and the grip, the grip will slide off. If you don't have a head on the end then you need to block the end somehow. Sounds simple, right? It doesn't always work, especially if the grips were installed a long time ago. In that case, just cut them off (you didn't want to save old grips, right?) and use air to install your new ones. When I install new grips, I only put a little tape over the butt end and then blow them on. They stick just fine and come off with air VERY easy. ALWAYS use the protective tube - exploding grips can put your eye out, Ralphie!
I use the Golfworks tool. I use 100 psi.