Shuffle words
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Randomly reorders the words on each line, keeping the lines themselves in place. A separate option shuffles whole lines instead, which is a different job.
How to use the shuffle words
The shuffle is a Fisher-Yates, which is the only common shuffle that is actually uniform — every ordering equally likely. The obvious alternative, sorting by a random key, is subtly biased and the bias is large enough to matter: Microsoft famously used it in a browser-ballot screen in 2010 and one browser landed in the last position about half the time.
Randomness comes from the browser’s cryptographic source rather than Math.random, which costs nothing here and means the result cannot be predicted from previous ones. That does not matter for shuffling a sentence and does matter for the draw and password tools that share the same generator, so it is used consistently.
Words and lines are separate operations for a reason. Shuffling words within each line keeps the structure — useful for making a word bank, a scrambled-sentence exercise, or anonymising the order of a list while keeping its grouping. Shuffling lines keeps each line intact and reorders the whole — which is what you want for randomising a playlist, a question order, or a list of names.
Questions
Yes, it is a Fisher-Yates shuffle — every ordering equally likely. Sorting by a random key is biased and noticeably so.