Deferred deep linking allows users to be redirected to specific content within a mobile app after installing the app from a link. It works by storing state information like URLs in cookies on the website. When the app is installed, it loads a redirect page from the website on launch that reads the cookies and passes the URL to open the corresponding content in the app using a custom URL scheme or universal links. This provides a better experience than traditional deep linking which would just open the app's home page.