Others say that you're wrong, but I think you're describing it approximately perfectly.
As you say: It does capture two billion pixels per second. It does watch a single pixel at a time, 921,600 times. And these pixels [each individually recorded at 2B FPS] are ultimately used to create a composition that embodies a 1280x720 video.
That's all correct.
And your summary is also correct: It definitely does not really capture 2 billion frames per second.
Unless we're severely distorting the definition of a "video frame" to also include "one image in a series of images that can be as small as one pixel," then accomplishing 2B entire frames per second is madness with today's technology.
As stated at ~3:43 in the video: "Basically, if you want to record video at 2 billion frames per second, you pretty much can't. Not at any reasonable resolution, with any reasonably-accessible consumer technology, for any remotely reasonable price. Which is why setups like this kind of cheat."
You appear to be in complete agreement with AlphaPhoenix, the presenter of this very finely-produced video.