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Digital video streams are represented by huge amounts of data, burdening its transmission (from the image sensor, where the data is continuously created) and storage alike.Most if not all cheap webcams come with built-it ASIC to do video compression in real-time.
As you noticed, this webcam testing tool does not require any additional software like Adobe Flash, Microsoft Silverlight or browser add-ons.
Typical interfaces used by articles marketed as a "webcam" are USB, Ethernet and IEEE 802.11 (denominated as IP camera). Various proprietary as well as free and open-source software is available to handle the UVC stream.
One could use Guvcview or GStreamer and GStreamer-based software to handle the UVC stream.
Some of them, for example, those used as online traffic cameras, are expensive, rugged professional video cameras.
Image sensors can be CMOS or CCD, the former being dominant for low-cost cameras, but CCD cameras do not necessarily outperform CMOS-based cameras in the low-price range.