Increasing the concentration of inhaled oxygen generally fixes this problem – because even poorly ventilated areas of the lung will now get enough oxygen. Taken together, the net result is hypoxemia. Alternatively, blood flowing to areas of the lung with excess ventilation will not be saturated over 100%. Blood going to portions of the lung which are inadequately ventilated will be starved of oxygen.
However, COVID is causing us to re-think how to manage this physiology. This isn’t anything especially new – we have occasionally seen this since time immemorial. Happy hypoxemia is severe hypoxemia (poorly responsive to supplemental oxygen) without dyspnea.