The current proposal plans on not defining anything about where and how those things are gonna be stored, but the plan behind all that (and how plenty of classes of the JVM have been designed even in foresight) is that a value type can be flattened (and each value type field recursively so). But do note that it is only a possibility — the JVM might decide that flattening all that would have a negative impact due to increase in size and opt for storing object references.

But the important part is losing identity - even if a field a few layers deep won’t be flattened, it doesn’t have to work the same way for the same data at every place - the JVM now is free to instead of copying the reference only, can choose to copy the value. This trivializes things like escape analysis as well (we can just stack allocate this value class, if it does turns out to escape, just copy to the heap).