refalo ,

That diagram is describing the hardware side of the NeTV, which is an FPGA device doing all this. That "mux" is describing a hardware 2:1 mux on the raw video streams, such as https://vlsiverify.com/verilog/verilog-codes/multiplexer/

The "magic" is described here: https://www.bunniestudios.com/blog/2011/implementation-of-mitm-attack-on-hdcp-secured-links/

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