Revised psak can be three different things.
1) A Rabbi or Beis din, realizes they made a big mistake. (certain pigs are kosher ... ooops! wrong)
So after the psak (legal decision) is issued (example: that pigs are kosher), the Rabbis issue a public recall and say "We made a grave error in judgment. It was a mistake. All should know that pigs were never kosher at all and continue to be forbidden for kosher consumption."
The ramifications are that anyone who ate pork during this time (when the permission was publicized) has committed a sinful act (albeit mistakenly) and needs to clean and purify (kasher) their pots and pans which were used with the pork.
We do not say that during the time of mistaken permission, everything is OK. Rather, we now know (revealed retroactively) that everyone was eating forbidden food.
The resulting question of how to atone for this, or who is responsible and on what level, is dealt with in the Talmud Tractate Horayos (starting on 2a).
2) In the Book of Ruth, "Ploni Almoni" is asked by Boaz, to marry Ruth. He declines to perform the mitzvah, because Ruth is a Moabite (forbidden by the Torah in marriage to a Jew).
Even though the law was taught that the verse means a male Moabite and not a female, "Ploni Almoni" was still concerned that a future great court having more members and greater wisdom, would reverse that decision retroactively. It may be that such a decision would not make him into a sinner (because he legitimately relied on the Rabbis of his time) ; but it would cause his children in that future generation to become tainted as Moabite descendants.
A future court may change the Halachah and that may change the ramifications of reality if it is greater in wisdom and number than the previous court. (Talmud Tractate Ediyus 1:5)
3) Finally, there is an example of relying on one opinion to decide Halachah and later switching to another opinion from now on. For instance, the Shulchan Aruch HaRav, in Hilchos Shabbos, constantly states that the time Shabbos starts on Friday night is "when it becomes dark" (tzeis hacochavim). However, The Jewish people (including followers of the 1st Lubavitcher Rebbe who wrote Shulchan Aruch HaRav) generally accept Shabbos on Friday night at an earlier time; at sundown (shkiah). The reason is that the Rav changed his mind in a later writing (as did many poskim of the time) and started to teach a stricter practical view of how we should keep Shabbos.
This doesn't mean that those who kept the old times sinned. It also does not mean that the Rav was mistaken. Rather, the Jewish people adopted a different path in Halachah based on a new controlling opinion. This has nothing to do with retroactive review.
As you can see, sometimes it may affect the no longer living; and something established as law from previous times is hard to reverse.
As far as reversing conversion psak, it is almost always about "new information" being brought to light and how we interpret it.
The important Halachic factors at work are ("THE MECHANISM BY WHICH THIS WORKS"):
Talmud Tractate Yevamos 47b: The Braisa states: "...after the convert immerses in the Mikveh he is “Jewish in all regards.”
The Gemara comments on this that "If the convert reneges (backslides, stops keeping the mitzvos, reverts to acting like a Gentile etc.) and then marries a Jewish woman he is regarded as a sinful Jew and his marriage is valid.”
Rashi there implies that even if he reverted to being a full Gentile his conversion is still valid.
So firstly we see from here that once the kosher conversion process is complete, it is actually irreversible.
So how is there any room to invalidate a conversion after the fact?
Well crucially, The Gemara above (that says a backslider is always a Jew) is applied to a case where he was a "sincere convert" but changed his mind later and decided to backslide.
If however, he was not a sincere convert, then he never was a Jew. So how do we know?
This revolves around revealing information that the initial conversion was a sham (fraud), completely insincere, or not kosher (or not supervised by an Orthodox Beis Din) to begin with.
If that was the case, then the conversion never took place. We may have been misinformed until now (for the past 100 years even) that there was a good conversion process, but now we find out that it was not. This is not "reversing a psak" or "invalidating a psak". It is the discovery that the convert was never a convert in the first place.
Another important Halachic idea:
What are the rules of a sincere and kosher conversion?
a) Here is a strict source :
Our Sages taught: …if an idol worshipper came to accept the Torah except for one thing (mitzvah), we do not accept him. R. Yossi b”r Yehudah says: even if the exception be one of the minutiae of the Rabbanan.
(Talmud Tractate Bechoros 30)
b) Here is a more lenient source:
"Our Rabbis taught: If at the present time a man desires to become a proselyte, he is to be addressed as follows: “What reason have you for desiring to become a proselyte? Do you not know that Israel at the present time are persecuted and oppressed, despised, harassed and overcome by afflictions”? If he replies “I know and yet am unworthy” he is accepted forthwith, and is given instruction in some of the minor and some of the major commandments. He is also told of the punishment for the transgression of the commandments and the reward of the world to come, But he is not, however, to be persuaded or dissuaded too much."
(Talmud Tractate Yevamos 47)
As we can see, the two Gemaras seem to differ in the extent the convert is informed and accepts "ALL MITZVOS."
Another concept at work, is called:
"Devarim She'b'lev ainam devarim" or "matters of the heart are not considered."
(see example: Talmud Tractate Kiddushin 49b).
This is a saying throughout the Talmud. In general, Beis Din cannot decide a case based on what is going on inside someone's heart.
Therefore, some traditions rely on the convert performing a bris, mikveh immersion, and declaring to accept mitzvos in front of a kosher Beis Din, to make a kosher conversion; but do not demand verified sincerity as a requirement. (see Rambam Hilchos Isurei Biah 13:17)
Stricter traditions, require the court to verify the convert's sincerity, being a requirement for a valid conversion. This is based on Shulchan Aruch 268:3 which requires sincere acceptance of the mitzvos as an integral part of a valid conversion.
The first approach claims that a court cannot know about sincerity at all because matters of the heart are not considered by the court. However, some (second approach) would say that in conversion, since the convert's sincerity is an essential ingredient before the court, then the court must try to understand the convert's sincerity.
A third approach says that we do not need to examine "matters of the heart" but still if it is blatantly obvious that the convert was not sincere, it is as if witnesses told us he is not and the conversion is invalid. (I believe this is brought as the opinion of R' Moshe Feinstein)
So to sum it all up, a community will accept good presumptions that a person claiming to be a convert, is a kosher Jew. Also, such good presumptions are not subject to review. However, if something is revealed which casts doubt on the person's conversion, an investigation may be made. Now depending upon which opinion(s) you hold of as stated above, the "new information" may show us that there never was a conversion in the first place.