Here’s how i understoood it from a mallers interview a while back:

They are the on-ramp and off-ramp on both ends. User1 sends USD to User2 who deals in EUR. You give Strike USD. They convert to Bitcoin, use lightning to transfer, then instantly convert to EUR.

Removes the need for users to like Bitcoin. Bitcoin and Lightning Network route everything and the users deal in the currency they need.

It also does Bitcoin and lightning payments, like you’d expect from a Bitcoin wallet.