For speed, an editing app may also produce lower-res versions in memory for quick seeking and smooth playback, as a kind of quick preview. But that's easy to control how much memory you allocate for that, and even those previews can be stored or cached on disk.
Video editing is not especially memory-bound on modern machines. It's much more CPU/GPU-bound when it comes to applying effects, and IO-bound (including decoding-bound) when it comes to larger videos like 4K and 8K.
I.e. 1. Newer API such as directory access, which would let the app utilize something like swap as necessarily. And only ever loading the data it can currently handle from the filesystem (https://developer.mozilla.org/en-US/docs/Web/API/File_System...)
2. Input doesn't necessarily have to be RAW/8k. You get several h of 1080p AV1 video within 4gb.
I think it ultimately depends on how much effort the Devs wants to invest to support large video inputs. If none is invested, then your assumption would be true.
I was unable to find the source code, so I wasn't able to check for myself. We'll have to wait for the author to chime in, if they're willing.
2. I'm assuming video editing software works on a raw format in memory with access to individual frames? Just like Photoshop would need access to individual pixels from an importend JPEG, the actual canvas uses a lot more memory than the compressed input format.