I'm guessing the app has a small built-in webserver - or perhaps relays through a 3rd party webserver - and the others join up in their browser using some kind of websocket like transport? Wonder if they direct the others to the app user's phone's internal wifi IP?
To use a local webserver, they would have to be on the same network (unlikely). To use the cloud based service, they would have to be on the internet (likely).