The NES's region lock is implemented in hardware, not software, with the CIC chip. The NES contains a CIC, and each authentic cartridge contains an identical CIC. When the console is powered on, the two chips communicate via a challenge-response handshake protocol, and if the cartridge fails to provide the correct responses, the CIC on the NES resets the system every second (hence the red blinking light). CICs manufactured for different regions use different keys, so that you can't play an American game on a European console (for example).
This means that if you tried to put an American game in your European console, the CIC check would fail and you'd get the blinking light. But because region-locking is a part of the cartridge hardware and not the game's software, you can swap out the ROM chip in an authentic European cartridge in order to play whatever game you want (whether European, American, Japanese, or unlicensed) since the cartridge still has a European CIC.
So how does your Everdrive defeat the CIC protection? Well, under the hood, the CIC is really just a simple four-bit microcontroller manufactured by Sharp, and the firmware has been dumped and reverse-engineered. I haven't found any detailed documentation of the protocol, but I have found that krikzz, the creator of the Everdrive, has also published an open-source AVR-based CIC clone. I don't have time right now to read through the source code and figure out how it works, but this line in the README stuck out to me:
Push the reset 4-8 times after than system region was changed, or if cic used at first time
The manual for your Everdrive mentions a similar procedure in the "Initial setup" section:
Configure CIC chip. Hit reset 7 times if red indicator is blinking on your system (NES only).
This strongly indicates that the Everdrive includes keys for all CIC regions, and during this initial setup process it simply tries each key until your NES accepts one of them. Once it has learned to spoof your console's CIC, your Everdrive is able to load and run ROMs from any region.