Your turbo is a fancy double-blade fan assembly where both fans are on a common shaft. One fan is in a housing through which all your exiting exhaust gases pass. The other fan is in a housing through which all your incoming air that is used for burning the fuel in your cylinders passes. When you depress the accelerator aggressively the exhaust gases spin the fans up fast enough that one in the intake path will begin to pressurize (BOOST) the ingoing air effectively putting more oxygen into the cylinders. The fuel system measures the ingoing air and matches fuel with in the correct amount and this extra packing of fuel and oxygen will create a much more powerful explosion and rotate the engine crankshaft with much more force creating more horsepower and more torque. The engine in your 850 is a 2.3 litre but with the level of boost Volvo engineers for that engine it produces the power of a non-turbo engine of 4.5-5.0 litres. But this extra output is only there on demand when you push it. On normal cruise it only uses its normal amount of fuel and air and produces a much lower power. (of course when you are cruising on level ground at normal speeds you don't need lots of horsepower nor the extra fuel consumption).
I hope this answers your questions, if not drop a line.