How does a ws2812b chip work?
If you know what it does, you're darn near to knowing how it works: there's not that much magic in there. I've put all the terms you should look up in italics:

it's got its own oscillator on-chip to generate some clock for internal use
functionally, it's a 24-bit shift register. Around that is a bit of finite state machine (fsm) to know whether we're shifting in data or are in some &quot;reset&quot; and &quot;transmission finished&quot; states (read the datasheet – it's not great, but it describes the timing and state transitions). To know whether something on DIN lasts long or short, it will probably compare the duration to the number of internal oscillations.
after detecting that the data currently in the shift register should be latched, that fsm loads the three 8-bit values in the shift register into three PWM units, which are clocked from the internal clock at ca 400 kHz to produce different amounts of duty cycles for each of the three LED current sinks.

And that's it. It's a three-channel PWM'ed current sink chip integrating three LEDs, controlled from a one-wire bus.