Netguard “blocks” the internet on selected app making it not able to access the internet. But it uses VPN to do it? Can the VPN see every requests made by the blocked apps?
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The VPN Provider is Netguard itself, locally on your device.
VPN is both, an interface on your device and a network connection (to a provider). Netguard only uses the first. So every request is going through Netguard but is not sent to a VPN provider, it leaves your device like it would if Netguard wasn’t active.
So no VPN provider can see your traffic.
While being sent through your local Netguard, the request is checked whether it should be blocked or not. This is done by its name. If the name is on a block list (real list or manually blocked) Netguard ensures that the request will end in nowhere otherwise it will go through.
The VPN is just a local loop, so it intercepts outgoing traffic, directs it to the VPN, which blocks whatever, and then the traffic goes out as normal.