Well, I think it all depends on the airport we're talking about. Although the basic system may be the same (more or less) there can be huge differences I think.
Anyway, over here in Brussels-National, the basic system is the following:
All pieces roll onto one big conveyor belt. Each piece of luggage is put on a different plate by computer. Somewhere there is some sort of electric scanning device, that reads the barcode. This way, the computer system knows where to tilt the plate (for example let's say at post 45).
So, when this particular piece of luggage reaches post 45, the plate tilts and 'pushes' the piece of luggage into a spiral cascade. A couple of meters below, the pice comes to a stop, the luggage handler picks up the bag and stops it either into a trolley (whenever the aircraft that will be used can't handle containers, e.g. B737, ARJ, ERJ, CRJ) or picks it up and puts into a container.
for long-haul flights, the old system is still being used (at least it still was last year): you have a bunch of carrousels (just like at the baggage claim area) where pieces of luggage fall onto via a conveyor belt system. Now, every carrousel has more than one destination. So, basically, it is the handler's responsibility to make sure all pieces for dest. A get into the trolley or container for dest. A, all pieces for dest. B into the trolley or container for dest. B, etc...
So, where the new system separates the pieces automatically, the old system still needs the baggage handler to separate the bags.
Hope this helps.
Ivan Coninx - Brussels Aviation Photography