Can get IP addresses from one of several sources:

• External websites
• Network interface of local machine (if there are multiple, the one with the default route)
• Fritz!Box API

Not only a single DNS entry/record pair is updated, but first an AXFR transfer of the whole zone is done, and then every record with a given (short) TTL is updated. For IPv4, the records are replaced. For IPv6, the host portion of the records is kept intact, while the network portion is updated.