Flippy opens the container, finds the data packets between your two handles, copies them into a fresh container and rebases the timestamps so the clip starts at zero. Nothing is decoded along the way, which is exactly why nothing is lost.
The one constraint: compressed video can only be entered at a keyframe, the periodic full pictures stored between the cheap in-between frames. So the start of your cut snaps to the nearest keyframe, typically within a second of where you aimed. That snap is the entire price of a lossless cut.
Frame-exact cutters exist: they re-encode the whole clip so they can start anywhere, which is slower and spends a generation of quality. For trimming recordings and pulling highlights, the lossless snap is almost always the better trade.