Under the hood, we are using Docker to build a container image that is used each time a student's submission needs to be graded. If you're not familiar with Docker, think of it as a lightweight virtual machine. Each container is isolated from others, and you can install anything you want inside the container.
The image is based on Ubuntu, so packages can be installed with apt, or from source or other means. The image is built once when you set up your assignment, and each time students submit a new instance of that image is spun up.
Our autograder harness downloads the student's submission and puts it in /autograder/submission, and then runs /autograder/run_autograder. Once run_autograder has finished running, the harness checks for output in /autograder/results/results.json, and uploads these results to Gradescope.