It’s probably both as all modern Intel igpus have video decoding and encoding hardware

Yes

This makes no sense to me. I’ve had h264 decoding on Firefox with VAAPI for years.

Probably both, the drivers are almost the same, just need a kernel flag.

If so that’s great for everybody… well almost everybody period, most notebooks have Intel gpus even if they have Optimus too.

As a layman, what does this mean roughly? Videos played on youtube will use more GPU than CPU?

That will also help LibreWolf, I can’t say if the code will make it into IceCat, if t’s ever updated, or Abrowser.