With regard to the 'how would it work' part of your question, the device plugs into an HDMI port on the back of your telly. You then press the 'Source' button on your TV's remote control to change the input signal from 'DTV' (or whatever your telly calls the normal TV source) to 'HDMI1' (or whatever). You'll then be viewing the output from the device plugged into your HDMI port.
The device connects wirelessly to your wifi router (just as your smart TV does) and is controlled by its own handset. That allows you to choose which app on it you want to use (i.e. Netflix in your case) and to select content from within that app (i.e. to choose which Netflix show you want to watch).