To but it briefly, the way the game increases the shiny odds with either the Shiny Charm and/or Masuda method is by rerolling extra personality values, the factor that determines a Pokémon's shininess and a myriad of other things, in an attempt to generate one that results in shininess. Think of it as rolling dice in an attempt to get the same number; the Masuda Method and Shiny Charm simply increase the amount of times you roll the dice!
Now, with the Egg Shiny Roll bug, the initial roll for both the Masuda Method and Shiny Charm aren't factored into the shiny odds when breeding, and only the bonus rerolls for the Personality Values are factored into the shiny odds. This would simply be the same as, say, flipping a coin, then going on to do so three times over for heads, but you only count the extra three rolls, regardless of if the coin landed on heads or not.
The Shiny Charm, just as it had in previous games, is intended to give 2 bonus rolls on top of the initial roll for the personality value for an intended odds of 3/4096 (approximately 1/1365), but as it only factors in the bonus rolls, it instead gives shiny odds of 2/4096 (or 1/2048). The Masuda Method however received an additional bonus roll in Gen 8 and beyond, retaining its old odds of 6/4096 (approximately 1/683), as opposed to its intended odds of 7/4096 (approximately 1/585)
When both are combined, the Masuda Method and Shiny Charm give 8 total rerolls. This results in 8/4096 (or 1/512) odds, although being intended to be 9/4096 (approximately 1/455). Therefore, the Shiny Charm's odds were lowered only when breeding, but thanks to the additional bonus roll, the Masuda Method and the Masuda Method combined with the Shiny Charm retain the same odds as they did in previous Generations.