It works because the translator can write template code that is executed by the templating engine at runtime, so the translator can write something like this as the translation:

  {switch $d}
   {case 1} foo {$d}...
   {case 2} {$d} bar..
   {default} ba{$d}z
  {/switch}

We provided the translators with some basic examples of if/then/switches and so on, they were free to do all sorts of crazy things (especially in polish).

Oh, ok, I understand now — that would work fine, then. It's actually a good solution, because it lets your translators customize strings right where they have the full context, e.g. in final templates.