The DFS-N client uses the DC Locator service and/or DFS-N DC Referral requests (depending on the OS version) to identify the name of a DC on the domain (e.g. dc1.corp.contoso.com).
DFS rewrites the path using the selected DC (e.g. \corp.contoso.comNETLOGONlogon.cmd becomes \dc1.corp.contoso.comNETLOGONlogon.cmd). Since Mutual Authentication is required and the target is expected to be a DC, DFS utilizes a special Kerberos Service Principal Name (SPN) to verify that the name retrieved in the previous step is indeed the name of a DC (if the name is not a DC, Kerberos authentication would fail due to an unknown SPN)
If there are additional DFS-N links in the specified UNC path, the DFS-N client continues iterating and replacing paths to DFS-N links with paths to available targets until it has a UNC path that does not have any remaining DFS-N links.