How does that work? The code has to be stored somewhere…

The code is replicated by everyone who works on it, and on various public and private servers, so you might say it's stored everywhere.

Linus memorises it.

It's just for the "last mile" where code gets packaged up into releases. There's still thousands of developers that have all of the code on their machines as well, it's just that their local repos aren't the ones that end up in the hands of end users.