From the emerging details, it appears the teams would have remained in their domestic leagues, but played in the ESL instead of the Champions League.
In the meantime, while all the attention was on ESL v UEFA, the small countries were downgraded even more by UEFA. NONE of their teams are allowed into the Europa League qualifiers. Instead they've been relegated to a new third tier of European competition being introduced immediately. So none of them will get any revenue generating games against top teams - instead its revenue sucking games against small teams in far away places that are difficult and expensive to travel to. A League of Ireland club employee once told me an away game against a small central Asian country could put a team into bankruptcy.(Never understood why the central Asian republics ended up in UEFA).