Last time I looked at a “system-wide” adblocker, it was just a vpn service with proxied your traffic (not just DNS) through a who-knows-what server. That seemed really sketchy to me, and I doubt most users knew the implications of it.
System-wide blockers on both iOS and Android do use the VPN API, but the idea is to intercept your outgoing traffic on the TUN interface, emulate the TCP/IP stack, and filter it locally, right on your device.
Of course, it could change its behavior if it detects a cellular connection...