The implication is that you would keep the data in its original form (or 420) only until you have to perform an operation to output a new image/rendering. You could then perform the operation (such as shading operations) in a larger color space on a graphics card, and finally afterward output again, perhaps as compressed YUV or perhaps as RGB over the wire in 8-, 10- or 12-bit (as you get to fancier HDR10+ and/or Dolby Vision). (Note in this post I'm using YUV instead of the more technically correct YCbCr...)
That said, this (storing JPEGs in YUV420) is just an optimization and the more images and displays go HDR, the less frequently we'll see YUV JPEGs, though we could see dithered versions, maybe, in 444. That's basically the same thing, but once you discard 420 and 422 you might as well use standard 8-bit RGB and skip the complexity of YCbCr altogether. If you're curious about HDR as I was, though 10-bit is "required", you can dither HDR to 8-bit and not notice the difference unless doing actual colour grading (where you need the extra detail, of course). For obvious reasons, I've never heard of anyone dithering HDR to YUV 420 though, and most computer screens look pretty terrible in when output to a TV as YUV422 or YUV420.
That said, this (storing JPEGs in YUV420) is just an optimization and the more images and displays go HDR, the less frequently we'll see YUV JPEGs, though we could see dithered versions, maybe, in 444. That's basically the same thing, but once you discard 420 and 422 you might as well use standard 8-bit RGB and skip the complexity of YCbCr altogether. If you're curious about HDR as I was, though 10-bit is "required", you can dither HDR to 8-bit and not notice the difference unless doing actual colour grading (where you need the extra detail, of course). For obvious reasons, I've never heard of anyone dithering HDR to YUV 420 though, and most computer screens look pretty terrible in when output to a TV as YUV422 or YUV420.