One channel of LSDj sets the filter, the other sets the amplitude.

The sounds comes from the internal workings of the gameboy, it is being patched into a 4017. The 4017 sets the pitch of the mostly noisy signals.. the reset point of the second 4017 is set by a 4052, that is controled by a 4520 that in turn is connected to a 74hc92 that is connected to the gameboy clock signal.