It's closer to bittorent than a VPN. It has end-to-end encryption and each node (the app that runs on your PC) distributes routes to each other (similar to how routing works on the Internet between large networks). It appears to be a flat spanning-tree style network.
They mention that it is using similar code and ideas as the cjdns project.
I use yggdrasil for NAT hole punching my VPN, for example.
>People often ask us for an overview of how Tailscale works. We’ve been putting off answering that, because we kept changing it!
Yggdrasil is fully peer to peer and doesn't require a central coordinator like tailscale does. Ygg is closer to a global network than a private one. You can make a private network, but if any peers on the network peer to the global net then your whole network is now peered. this should be handled at the firewall level, or with an overlay VPN.
I still facepalm whenever I think about this.