In effect, they sell the product to customers, and handle all the tax on that side, for every tax regime in the world.
Meanwhile you act as a company with a single B2B client and one invoice a month (covering Paddle's net sales minus 5%) instead of N invoices. They send you an email every month with your 'reverse invoice'. As accountancy goes it's extremely easy, but you do need to do the basic tax filing in your local jurisdiction.
That 5% includes all the processing fees, they also have a bunch of useful subscription infrastructure, and they handle customer support for billing issues, which tends to be a substantial percentage of issues as you get larger.
So far they've been great, and doing nearly zero accountancy is worth a lot of money to me as an indie dev with a digital product (where you need to know a lot about local digital taxes nowadays). That said, would I do the same at the beginning if this existed a few years ago? Hard to know, but this doesn't look so compelling that I'm likely to switch now.