Maybe the same as tourists driving in the US without US licenses.

Perhaps they track who you talk to and show you ads that are relevant to those people, or their best guess based on two profiles.

I don’t think there’s a data center out there with a live audio stream of literally billions of always-on devices 24/7/365.

Perhaps there’s some local processing first, but devices have permissions for apps, and lights that indicate the mic/camera is in use.

I figure someone would have figured it out by now (reverse engineering, decompiling code), or someone from Google/Apple/Samsung would have leaked it if it were true. Think of the number of people required to keep this secret.