Transcoding a lossy format like H.264 or VP9 to AV1 will reduce the quality.
Not by much and it can save a bunch of space depending on what you're working with. Works well with modern anime. Squashing a h264 60GB anime to <10GB with minimal quality loss is pretty satisfying.
They state it's under gpl2 they do have ffmpeg but the tool doesn't include its own codecs outside of that if I understand it correctly. It does use any codecs provided by the OS though.