The project reference is just there so that MsBuild (VS) can copy the client files to the server's bin directory.
The server then has a special middleware component to serve the client. The following lines are both about serving static files:
app.UseBlazorFrameworkFiles();
app.UseStaticFiles();
The Server does not actually link to or reference any code in the Client.
Is the client code being hosted in the server project on the same port?
Yes, just as a convenience. You could host the client somewhere else (but then also think about CORS settings).
I cannot determine what code allows the server to display the client?
That happens with the last line in UseEndPoints :
endpoints.MapControllers(); // handle /api
endpoints.MapFallbackToFile("index.html"); // everything else
Do note that because of this your API will never return a 404 code. It will return the "nothing here" page of your client app instead. And you will see a "HTML isn't JSON" related error.