So how do open source browsers like Chromium and Firefox do this? Surely if they have access to the blackbox, then anyone does? And if they don't, it means you can't watch Netflix on some major browsers.
This is also the case for Brave browser, a dialog opens asking to download the binary. I suspect this is also the case with other Chromium browsers, they may do it without prompting though.
This depends on the agreement that the media distributor has with the media owner; there's no technical reason behind the 720p limitation.
Widevine is offered with different levels, depending on the length of the secure path. On mainline Linux, there is no secure path to the screen AFAIK, so you can always read the unencrypted video from a recompiled graphics driver, and as such it only is supported in Widevine's lowest level.
You can also find a link to the Chrome extension there. I'm not sure if there's a cat-and-mouse game here -- the first time I tried it, the Firefox extension didn't work. However, it started working a few months later.
Firefox on Ubuntu 16.04 NVIDIA proprietary driver here. I searched for 1080p on YouTube and the first result is this harmless video https://www.youtube.com/watch?v=DQuhA5ZCV9M
It started at 720p, then I switched it to 1080p and it started playing at that resolution. However I didn't count the lines and I don't know if this is the kind of streaming you're writing about. Maybe Netflix? I can't check that.
I'm pretty sure YouTube doesn't support DRM at all. Premium originals (e.g. Mind Field) play in 4K for me on FreeBSD (for which no one has ever compiled Widevine or anything like that)