They send you a completely new one. I know of exactly just one person who did it. He noticed that the mesh on the earbud itself was straight up new (his one was dented a little bit in certain spots due to his attempts to clean out some earwax using a sim-card ejection tool), and the plastic was spotless clean with no scratches.

I'm not sure since I've never done it. My guess would be that they just give you new ones, then send the old ones away somewhere to be refurbished and sold as such. This was my experience with iPhones in the early days, actually. Now they actually try to fix them on site if they can.