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It does solve the problem because Google download the image no mater what so you can't know if someone opened the image or not.

Google's service delays downloading the image until the moment it is requested by the client.

But is that when they "open" the email, or simply them opening Gmail?

Mailchimp analytics would outright not work if it was the latter, so it's probably the former.

Correct. This is how Mailchimp and other similar services can tell if you opened an email.