It’s my night Lemmians
The one you are thinking is Adaway which makes changes to the system host file.
AdGuard creates a local VPN connection and lets all traffic run through that blocking based on filters. Your VPN slot is taken up here.
NextDNS just changes your phone DNS to its servers and blocks based on filters. Here, your VPN slot is essentially free for use with actual VPN apps.
But, how are they making their revenue?