Can someone explain this circuit?

[ElectricPower]

I know what the circuit under do. It is an known circuit made for protecting a commodore 64 against over voltage. I know that the TL431 works as an adjustable zener that turns off when voltage goes over 5.4V.

I also see an P-channel and a small N-channel mosfet.

But can someone explain how the circuit actually works and how the electricity flows?

I just want to understand what actually happens in the circuit

[Ian.M]

What you think you know isn't so!

A TL431 is *NOT* an adjustable 'Zener', and although it can indeed be wired to operate as a shunt regulator, in your circuit, it isn't wired that way.  You can think of it as a single-ended OPAMP (i.e. it can only drive low and needs an external pullup to function) powered from its 'Cathode' pin with an internal 2.5V reference wired to its inaccessible +in, and its -in brought out to the Adj pin.

In your circuit, its acting as a comparator, comparing Adj to its internal reference, pulling its output low if the Adj pin is higher than the reference voltage.

With that misconception corrected, you should be able to analyse the rest of the circuit, determine its trip threshold, and how low the 5V rail must drop to reset it. 

N.B. it may not be a particularly good circuit as its slower to turn off than it could be, as the N-MOSFET gate charge has to discharge through a total of 7.2K of resistance.  A push-pull gate drive circuit could speed that up considerably, reducing the risk of it letting through a high voltage spike.

[pqass]

Here is a simulation of your circuit. 
Use the "Voltage Input" slider on the right margin to see what happens.
Also, see below for screenshots of before and after the trip point.

[Plinsboorg]

This app note explains a similar circuit to the one you're asking about.
https://www.ti.com/lit/an/slva987a/slva987a.pdf?ts=1698852310909&ref_url=https%253A%252F%252Fwww.google.com%252F