Blokada registers itself as a VPN service on the phone so that it can intercept all network traffic. It then downloads filter lists to route the domains of known advertisers, trackers, etc to a black hole, exactly like what I do on my real computer with hostsctl. For me it has had no noticeable impact on battery life. I have found it especially useful when travelling internationally and purchasing cellular plans with small data caps. The only disadvantage I have found is that Blokada must be disabled when I want to connect to a real VPN via WireGuard or OpenVPN.
Blokada must be installed via F-Droid (or directly through the APK) because Google frowns upon blocking advertisements (but at least Google allows you to install software on your telephone outside of their walled garden, unlike their competitor).