Everything happens in your browser — your image is never uploaded to a server.
Pixelation turns a photo into a mosaic of large, flat-colored blocks, giving it the blocky look of early video games or a censored/blurred region. It's a popular effect for retro-style avatars, thumbnails, and privacy-blurring parts of an image, and it works entirely by downscaling the image and then scaling it back up without smoothing.
The tool shrinks your image down to a much smaller size — where each tiny pixel represents a block of the original — using the pixel size you choose, then scales that tiny image back up to the original dimensions without any smoothing (nearest-neighbor scaling). The result is that each original block of pixels is replaced by a single flat color, creating the blocky mosaic effect. A larger pixel size produces a chunkier, more abstract result.