It’s basically just a transistor pass-element with a current limit. Ie, it’s designed to pass up to 350mA (or 380mA) by saturating, and will pull out of saturation into “active mode” if the device tries drawing more.
Think of a 65mph governor on a truck. Keep it floored, and it’ll go 65mph forever. But if you try going up a steep hill with too much of a load, of course the truck’s speed will drop. Level out, and it’ll get back to 65mph and stay there.