Actually it’s a little bit of both. Some devices use an an audio stream that is encoded kind of like a normal digital audio signal where the bits go up in the encoded audio when you turn up the volume and so does the output. Other devices send a full level audio signal and send a separate control signal which tells the device to turn the volume up or down. If you push the volume button on the receiver and it shows the volume on the source (your phone) going up or down in sync with it, then it’s the latter.
Actually it’s a little bit of both. Some devices use an an audio stream that is encoded kind of like a normal digital audio signal where the bits go up in the encoded audio when you turn up the volume and so does the output. Other devices send a full level audio signal and send a separate control signal which tells the device to turn the volume up or down. If you push the volume button on the receiver and it shows the volume on the source (your phone) going up or down in sync with it, then it’s the latter.