This solution comes from https://people.eecs.berkeley.edu/~luca/cs172-07/solutions/practicefinal-sol.pdf
Consider the language
$$ EQ_{NFA} = \{ \langle N, N^\prime \rangle \mid N, N^\prime \text{ are NFA's with the same alphabet and } L(N) = L(N^\prime) \} $$ show that $EQ_{NFA} \in \textbf{PSPACE}$.
(hint: Can you convert this to a appropriate reachability problem?)
Solution Outline: Suppose $N$ and $N^\prime$ both have at most $n$ states. We can then convert them into DFAs $D_N$ and $D_{N^\prime}$ with at most $m = 2n$ states each using space polynomial in $n$. Finally, we can construct a DFA $S$, which is the product of $D_N$ and $D_{N^\prime}$ (with at most $m = 2^n$ states) and accepts $L(D_N)\Delta L(D_{N^\prime})$ (strings that are in exactly one of the languages). Now, $L(N) = L(N^\prime)$ iff $L(S) = \emptyset$ i.e. none of the final states are reachable from the start state in $S$.
Since this is a reachability problem, it can be decided nondeterministically using space logarithmic in the size of the graph (because $PATH \in NL$). Thus, this problem can be decided in $NSPACE(\log{(m^2)}) = NSPACE(n) \subseteq NSPACE(n^2) \subseteq PSPACE)$.
I see that it works and I see that the last paragraph try to convince that it is actually $PSPACE$. But, I have a doubt:
After all, the solution constructs two exponential automats. How is it possible?
My intuition is that: We can compute DFA for NFA using $\log n$ memory on working tape. Obviously, we have to use exponential size of memory but on the output (readonly) tape.
Now, when we construct it we can use it in reachability problem which works in $NL$. We know that composition of $LOG$ function is $LOG$. Is my understanding correct? Does the same apply (I mean a composition of functions) when it comes to $NLOG$?