As mentioned above, it is like the circular buffer. I checked with my son who is an engineer for that company and he said that yes, that's basically how it works. When you bring up the camera app it starts recording to a buffer. When you push the button it tags that frame as the "key frame" and saves what was recorded 1.5 seconds before and 1.5 seconds after.
Yes, there are all kinds of doo dads in that small package of technology. When I got mine I downloaded and read the manual. Not all of it as I skipped over most of the phone features, like conference calling, etc. The Live Photo instructions, which should work for most models is here:
https://support.apple.com/guide/iphone/take-live-photos-iph17471d6de/ios