Typically it's done through source code generation or a runtime interpreter - state machine systems implementing a "DSL->source code" mechanism have been around for nearly as long as high level languages, and by taking this approach they have a lot of freedom to include compiler techniques of their choosing. If dynamism is called for then the diagram is typically kept in memory and interpreted at runtime.

Doing it through types is intellectually interesting and makes the result more integrated into the edit-compile loop instead of involving a step in the build process or a step of invoking an interpreter, but it might not change the practical state of the art.