It uses ffmpeg open source library.

FFmpeg compresses videos by:
 * Choosing a codec: This determines how the video is encoded (e.g., H.264, HEVC).
 * Reducing resolution: Making the video smaller (e.g., from 1080p to 720p).
 * Lowering frame rate: Showing fewer frames per second.
 * Adjusting bitrate: Controlling the amount of data used per second.
 * Using keyframes: Storing complete frames less often.
 * Quantizing colors: Reducing the number of colors in each pixel.
 * Analyzing motion: Finding and removing repeated information.
By combining these techniques, FFmpeg can make videos smaller while maintaining good quality.
 

 I think the confusion came from the button labelled, "download." why is it labelled that way when the file isn't coming from the cloud?