Earlier quoted context omitted.
I've also just updated the README to make it more obvious what the extension does. The default alternative frontend I have configured is https://piped.video , but you can use any different instance / service if it supports the same YouTube url scheme ({domain}/watch?v=...). This is configurable in the add-on's options page, you can also access it by clicking on the add-on's icon
Thanks, I've looked at the docs of newpipe and invidious and neither make it straight forward to understand how they work. Both focus on "this is more private than watching on youtube" It sounds like there is some kind of instance/server which my client/with a cleaner frontend will talk to. But how does that work and why can youtube not detect it and block it?
Google uses DASH as the manifest file for streaming video. Each video has a corresponding DASH file. You can download the DASH manifest XML file from the Youtube page for the video. Then extract video segment URLs from the file. Those typically go to the googlevideo.com host. Google uses WebM as video container and VP9 for video encoding for the video segment, which most browsers support.
Most streaming players (alternative players) use the MSE API (Media Source Extensions) to feed the downloaded video segment data to the tag to play the video. Most browsers support MSE these days.