Question

How is value used to create the illusion of 3D space on a flat 2D surface

Answer 1

By adding value it creates a sense of depth, because you are adding multiple shades of a certain color and putting them on top of one another.  If you look at things from life you will notice that these things are not just one shade, but rather multiple colors put together to create the idea of form. Value adds form and depth into a seemingly flat surface, making it look like its coming off the page.