It works the same as "you," which at one time was a plural pronoun, not a singular one. (The singular form was "thou.") In formal English, both "you" and "they" use the verb forms that go with plurals even when they're referring to one individual. It's not really consistent, but what in English ever is? So, like this:
You are wonderful.
They are wonderful.
You were sitting in this chair.
They were sitting in this chair.