If you make no attempt to understand the elements of a problem, then the answer will
be confusing. You can't think of entire devices as just magic black boxes that :do stuff:
A simple train of thought:
How much bandwith does a raw video stream take up? Well we've got to look it up. 10 seconds in google tells us: aprox 20MB per second
How much bandwith does a regular USB device have available? Well we've got to look that up too, back to google. In high speed mode about 1.4MB per second
Well, that's pretty cut and dry right there, so no, you cannot stream "video" directly over USB, not even close. Well "magic box" does, so how do they do it?
Well what ways off the top of your head can you think of to fit 20MB of data down a 1.4MB pipe.
You could capture at 2 FPS (not what they're doing)
You could capture at 72x48 resolution (also not what they're doing)
You could compress the data (!)
Hmm... realtime video compression, all of a sudden that is starting to sound a lot like reasonably heavy "processing and memory storing".
And that's just thinking about the USB transport alone, not with emulating a webcam device, or digitizing the video signal, or even just transmitting the data (can an Arduino transmit 1mbps? 12mbps? 480mbps?)
I have an SD card that can store 2 gig of data, and yet I'm told that my Arduino can only hold 2k of data. This confuses me, obviously I'm looking at a smaller device that can hold way more data so why doesn't it make sense?
Well the answer is that an SD card and an Arduino are entirely
different devices, with entirely different capabilities, built for entirely different purposes. Comparing a USB video capture device, or an Atom laptop (which is something like 2 orders of magnitude faster, and chocked full of specialized, dedicated hardware) with an Arduino is just as crazy a comparison.
Meantime you have yet to explain why it works on the $55 dongle.
You get more intelligent and far less condescending answers if you attempt to understand even just the question yourself. Don't expect the information to just flood out of the screen at you if all you're willing to do is throw up your hands and say "I dunno"