The Bus Interface Unit has a lot of flip-flops to manage memory accesses. When a HALT comes in, it finishes any current memory access but new ones are stopped. In particular, the prefetch circuitry is blocked. A special mini-memory-cycle indicates the CPU is in the halt state.
The CPU sits in the HALT state until an interrupt or reset signal comes in. This starts a microcode routine to handle the interrupt. The interrupt also blocks the Group Decode ROM from decoding the HLT instruction, ending the HALT state.