How does ADS B Exchange work?

ADS-B Exchange mainly shows ADS-B and MLAT positions. Source ADS-B: ADS-B transponders broadcast the aircrafts location twice a second (and also send other data which includes everything a ModeS transponder sends).

Source MLAT: ModeS transponders are the older technology and don't broadcast location. To obtain the location the arrival time of a message received by at least 4 receivers is used to determine the location, this is less precise than ADS-B positions but large errors will usually be obvious looking at the flight path (jagged path).

Secondary radar in general: https://www.radartutorial.eu/13.ssr/sr04.en.html ModeS: https://www.radartutorial.eu/13.ssr/sr20.en.html

ADS-B / ModeS message formats: https://mode-s.org/decode/

The ICAO 24 bit address for each aircraft, often called icao id / hex id or even shorter icao / hex: https://en.wikipedia.org/wiki/Aviation_transponder_interrogation_modes#ICAO_24-bit_address

Note that transponders can be misconfigured and will then transmit the wrong identification. Military planes will sometimes use a bogus hex id or will deactivate their civilian transponders alltogether. Some older military planes only have a ModeC transponder installed, adsbexchange doesn't display ModeC data as getting a position via MLAT would be unreliable and not worth the effort as the plane can't be identified (no unique 24 bit hex id like ModeS has).

And if you're into videos, this explains a bit: https://www.youtube.com/watch?v=KkowxHF8g3M

Around 8000 ADS-B Exchange contributors all over the world use their SDR (software defined radio) and an antenna to receive 1090 MHz and send the data to ADS-B Exchange.