How Code Is Getting All Permutations Of A String With Recursion

how the code is getting all the permutations of a string with recursion. The following code works correctly but I am having trouble grasping what it is doing.

public class Main {
private static void permutation(String prefix, String str){
int n = str.length();
if (n == 0)
System.out.println(prefix);
else {
for (int i = 0; i < n; i++)
permutation(prefix + str.charAt(i),
str.substring(0, i) + str.substring(i+1));
}
}
public static void main(String[] args) {
permutation("", "ABCD");
}
}

I see that each character is being appended to prefix through each iteration. So I know it adds "A" then "B" etc etc. I can follow it up until the "D" is appended to the prefix string. After that I don't understand how the D moves back to the str string and then the C moves back to str followed by the D moving back to the prefix string. I have stepped through the code many times in my debugger but still don't see how it moves back to str and knows to send D to prefix and not to send C. I feel I don't understand how recursion behaves therefore I can't follow.