How does arXiv prepublishing work with ICLR's double-blind review? [R]

Hey folks, maybe a really dumb question from an inexperienced PhD student. I recently submitted to ICLR and spotted a bunch of papers that I was already familiar with because I had seen them on arXiv before. Doesn't this break the double-blind review process? I mean, on the one hand, people pre-publishing their work want to establish priority as quickly as possible, but on the other hand, they still want their papers to be treated as valid submissions in a double-blind review system. I generally avoid pre-publishing my work for this reason, although this can cause some trouble when it comes to