[beepboopboop]

This is really weird. Why would a digital transfer do this? I could understand if it was dividing up a single bitcoin, but why would it require sending all the Bitcoin?

To fix your example, it’d be more like paying for a $20 item with $100MM worth of $50 notes, and receiving $100MM-20 in change.

[TimJRobinson]

It's a database optimization. Whenever you send funds that entire UTXO is destroyed and redistributed to new ones. Because of this you can easily calculate the current state of Bitcoin by only looking at the current UTXO set, and ignore all the old destroyed ones, instead of having to go back in history and see who sent what where.

It also allows for easier parallel processing because you can check many UTXO's in parallel without having some shared state they interacted with.

Only a few chains use this system - Bitcoin, Litecoin, Cardano, Fuel, maybe some others. Almost everything else uses an account based model, where everyone has an account balance, like how you'd imagine a blockchain whould work.