I am not sure I understand the first half of your comment.
"App how will it know and alow user to change new password with the links sent"
Firebase sends the user a link to change the password on the email. On clicking the email, the user can go through the process of setting up a new password. After the new password is set, the user can use that new credential to login the app. The new credential is saved in Firebase as soon as the user has set it. This is a common practice that apps/websites handle password resets. In this case, this is handle by the Firebase.
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I am not sure I understand the first half of your comment.
Firebase sends the user a link to change the password on the email. On clicking the email, the user can go through the process of setting up a new password. After the new password is set, the user can use that new credential to login the app. The new credential is saved in Firebase as soon as the user has set it. This is a common practice that apps/websites handle password resets. In this case, this is handle by the Firebase.