The previous analog circuit triggers the paddles by bringing PADTRIGGER1 or PADTRIGGER2 high. (That circuit isn't shown here to speed up the simulation.) When VPAD1 or VPAD2 goes low, the paddle gets drawn four pixels wide. It starts on horizontal position 128 and 384, when 128H is high, then stops when the D flip flop in the lower left brings its output high, four pixels later.
You can manually turn on attract mode in the lower right. That will hide the paddles.
Next: Drawing the Score.