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I am not well versed about the Strike wallet specifically, but I believe that it is a fiat wallet from the perspective of the sender and a lightning wallet from the perspective of the receiver.

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Ok but why. They have a custodial wallet on both sides, the sender sends dollars, the receiver gets dollars. Why not just use addition and subtraction instead of LN? I can't think of a reason they would do this except to shoehorn LN into the app or avoid regulations in some way. Is there something I'm missing?

They use bitcoin exchanges around the world that are connected through Bitcoin Lightning network. Your dollars are exchanged to bitcoin at your local exchange, transferred via Lightning Network to an exchange in El Salvador, exchanged to dollars, and the dollars are then available at a local bank or ATM (or just kept in the app to pay someone else). Strike itself doesn't provide the liquidity, they use available local exchanges.

If you pay someone in the same country with the same currency, then it works probably like Paypal. You can't do that between countries, because the actual dollars have to be in the local bank.

This.

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