It does transmux mpeg2-ts files into fmp4 to be able to play them on Chrome/android, though it only does so when those ts files are referenced in HLS (https://en.wikipedia.org/wiki/HTTP_Live_Streaming) playlists, as this player only loads HLS contents, not fmp4 nor mpeg2-ts directly.
The transmuxer is declared in the src/ts-transmux directory if you're curious. It's based on a fork of mux.js's one (https://github.com/videojs/mux.js/). To just transmux ts files to fmp4, you may prefer relying directly on mux.js instead.
Only one of the three playlists is linked to ts segments, the others rely on fmp4 segments (another segment format authorized in HLS).
Note that this is the same HLS format you'll usually find on streaming websites. I've been playing for example a lot of twitch contents through that player.
The transmuxer is declared in the src/ts-transmux directory if you're curious. It's based on a fork of mux.js's one (https://github.com/videojs/mux.js/). To just transmux ts files to fmp4, you may prefer relying directly on mux.js instead.