How does this code enable the redirection flow?

The flow:

1. User go to www.myfrontend.tech/auth/microsoft (forwarded to https://mybackend.io/front/auth/microsoft on the backend, since it matches location ~ /auth/(.*) on your nginx configuration)
2. It will redirect to Microsoft auth page
3. After user clicked authorize, it will redirected to the callback URL on your Microsoft Oauth App, which in your case is www.frontend.tech/auth/microsoft/callback (forwarded to https://mybackend.io/front/auth/microsoft/callback on the backend, since it matches location ~ /auth/(.*) on your nginx configuration)
4. On that callback, passport middleware checks if the authorization succeed or not, if it is, it will redirect to successRedirect URI, which is www.frontend.tech/auth/signinSuccess (forwarded to https://mybackend.io/front/auth/signinSuccess on the backend, since it matches location ~ /auth/(.*) on your nginx configuration)
5. Express app handle auth/signinSuccess success call, and redirects to /socialLoginSuccess, since /socialLoginSuccess location matches location ~ /socialLoginSuccess on your Nginx configuration (not location ~ /auth/(.*) therefor there's no proxy pass), it will be redirected to www.frontend.tech/#/socialLoginSuccess (by the rewrite ^ '/#/socialLoginSuccess' redirect;)
6. Since it's redirected to www.frontend.tech/#/socialLoginSuccess, it's now being handled by React router

And to answer your questions:

1. successRedirect will go to your front end, so it will be www.myfrontend.tech/auth/signinSuccess, but since you have proxy configuration on Nginx, and it matches location ~ /auth/(.*), it's being forwarded to www.mybackend.io/front/auth/signinSuccess (read more about reverse proxy)
2. res.redirect("/socialLoginSuccess") will redirect you to www.frontend.tech/#/socialLoginSuccess, the reason is mentioned on the 5th flow above