This is one of my favorite sparring methods, and I recently recorded a couple of my students working it after going over applications for Chibana Chosin's Kihongata (Basic Forms), which I think gives a good look at how to start out. Over time, of course, you ramp up the intensity, resistance, and level of impact (except to the head, because we don't need TBI happening in training). This training format forces you to remain close to your opponent, which allows you to access pretty much all of your kata applications, as it is the appropriate range for them. Obviously, the context isn't correct, so you have to account for that with things like "bully sparring" and scenario training, and it doesn't cover long range, which is where kickboxing and MMA sparring come into play.

https://youtu.be/tYK96bkx3Tg