Advantage and Implementation of Angular Universal?

Question

Ancient website:

• User navigates to url via bar or href, server call is made for that particular page
• The page is returned (either static html or html rendered on server by ASP.NET MVC, etc
• EVERY page reloads everything, slow, reason to go to SPA

Angular 2 SPA:

• User navigates to url via bar or router
• A server call is made for the component's html/javascript
• ONLY the stuff within the router outlet is loaded, not the navbar, etc (main advantage of SPAs)
• HOWEVER, html is not actually received from server as is, Angular 2 code/markup is - then this markup is processed on the CLIENT before it can be displayed as plain HTML, which the browser can understand - SLOW? Enter Angular Universal?

Angular Universal:

First time users of your application will instantly see a server rendered view which greatly improves perceived performance and the overall user experience.

So, in short:

• User navigates to url via search bar or router
• Instead of returning Angular components, Angular Universal actually turns those components into html AND then sends them to the client. This is the ONLY advantage.

TLDR:

1. Is my understanding of what Angular Universal does correct? (last bullet point above).
2. And most importantly, assuming I understand what it does, how does it achieve this? My understanding is that IIS or whatever just returns requested resources, so how does Angular Universal pre-process them (edit: I would basically running something akin to an API that returns processed html)?
3. This HAS to mean that the server makes all the initial API calls needed to display the initial view, for example from route resolves...correct?

Edit: Let's focus on this approach to narrow down the question:

The second approach is to dynamically re-render your application on a web server for each request. There are still several caching options available with this approach to improve scalability and performance, but you would be running your application code within the context of Angular Universal for each request.

The approach here:

The first option is to pre-render your application which means that you would use one of the Universal build tools (i.e. gulp, grunt, broccoli, webpack, etc.) to generate static HTML for all your routes at build time. Then you could deploy that static HTML to a CDN.

is beyond me. Seeing how there is a bunch of dynamic content there, yet we preload static html.