What Background Removal Actually Does
Background removal is image segmentation. A neural network looks at every pixel in the photo and classifies it as either subject or background, then writes alpha = 0 for every pixel it called background. The result is a PNG where only the subject is visible and everything else is transparent.
That is a different problem from chroma-key (the green-screen technique used in film, which requires a specific solid backdrop) and from manual masking in Photoshop (slow, skilled, and not usable at scale). The model the paid services run is the same family of model this tool runs. The only difference is where it runs: a paid service ships your photo to a GPU in a data center; this tool downloads the model once into your browser and runs the same inference on your own CPU.