The data-transfer and the connection to the server are maintained by a simple embedded Flashmovie in your page. The communication with other clients runs through the local Flashmovie and the Red5-Server.
The data-flow between two clients looks like this:
Red5, by the way, is an open source implementation of Adobe’s Flash Server. It can be used to stream or record video, or provide low latency, event-based communication via remote shared objects.