let us give an example:
we have two numbers in two bytes in binary:
A = 10010111
B = 00100110
(note that the machine does not know the concept of signed or unsigned in this level)
now when you say "add" these two, what does the machine? it simply adds:
R = 10111101 (and carry bit : 1)
now, we -as compiler- need to interpret the operation. we have two options: the numbers can be signed or unsigned.
1- unsigned case: in c, the numbers are of type "unsigned char" and the values are 151 and 38 and the result is 189. this is trivial.
2 - signed case: we, the compiler, interpret the numbers according to their msb and the first number is -105 and the second is still 38. so -105 + 38 = -67. But -67 is 10111101. But this is what we already have in the result (R)! The result is same, the only difference is how the compiler interprets it.
The conclusion is that, no matter how we consider the numbers, the machine does the same operation on the numbers. But the compiler will interpret the results in its turn.
Note that, it is not the machine who knows the concept of 2's complement. it just adds two numbers without caring the content. The compiler, then, looks at the sign bit and decides.
When it comes to subtraction, this time again, the operation is unique: take 2's complement of the second number and add the two.