Their approach works by blocking trackers specifically, similar to an ad blocker, rather than blocking all external resources completely. Hey.com take a similar approach I think. Although the images from that test service are allowed, trackers from all the popular email tracking services will be blocked (in theory at least).
It's not going to be 100% effective of course, but I suspect it's very close to that for most real-world email tracking, and the user experience is dramatically better (i.e. you can read emails that include images with no hassle and avoid being tracked all at the same time). And they do proxy all images through their own servers, so any missed trackers still get only limited info.