Question about Direct Offline Processing

I’m a Cubase user… but I see Nuendo just got Direct Offline Processing. It looks like a really cool feature - hoping to see it in Cubase sometime soon… but I have a question:

Does it work with external hardware effects? If so, how does it work? Does it lock up your I/O for that particular clip? - or can it be used on multiple clips once applied?

Thanks guys!