Slackly, it's just like having all cars in the right side of the road, except there's no centerline to cross.
VFR traffic, who can see each other, have two altitudes to fly at, one for eastbound and one for westbound. Instrument traffic, who may or may not be able to see, also have two altitudes to fly at, and these are different than the VFR guys. IFR traffic uses the IFR altitudes regardless of visibility, it makes it easy for ATC to tell them apart.
The dividing line isn't painted in the road, it's right there in your compass / DG, are you flying to the East side or the West side of the 180-360° line? Easy peasy. This reduces the chance of midair collisions by letting everyone know where to look. IFR flight is permitted up,to 200' variation in altitude, but I try to never get that far off. Nevertheless, IFR flight is permitted as long as my altimeter reads within 75' of departure field elevation when set to the current altimeter setting. That's an automatic 150' spread.
If you have every plane choose an altitude within a 400' spread, spotting other traffic will be much more difficult as you'll need to look up and down as well as in front and to both sides, and little planes a few miles away are hard to spot below you when flying over developed urban areas. So the rules make it easier to spot traffic, while providing separation between airplanes flying in opposite directions.