It does this by encapsulating the IPv6 data inside IPv4 packets and sending them to a special Teredo server on the internet, which unwraps them.
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A tunnel adapter is a virtual network interface that creates a tunnel between two endpoints, allowing data to be transmitted between them. In the case of Teredo tunneling, the tunnel adapter is used to encapsulate IPv6 packets in IPv4 packets and transmit them over an IPv4 network. tunnel adapter teredo tunneling pseudo-interface
Windows will automatically reinstall a fresh copy of the driver on reboot. This fixes 95% of Teredo issues. It does this by encapsulating the IPv6 data