Freaky. They have a page explaining the concept (https://ipinfo.io/data/residential-proxy); when I checked it, there was a FOUC showing a full-screen, stretched image of what I think was Dario Amodei's face.
Neat. I almost said "surely this will only detect if your internet connection is itself being routed through a residential proxy", and then I realised that's effectively the same thing!
It detects if your IP is a residential proxy, not if you are using a residential proxy. From the perspective of the outside Internet, they are the same thing, the only one who cares about the difference is you.