How does the processing happen in a CPU when it uses Virtual Memory?
Virtual memory is handled just in the part of the CPU that handles reading and writing memory. 

At some point, the CPU has calculated a memory address and has decided to read or write memory at that location. If there is no virtual memory used, then the memory address is the actual address in the physical memory connected to the CPU. With virtual memory, the memory access part of the CPU will first translate the virtual memory address to a real memory address.