Universally translates the HTML your server sends. Anything present in that response is translated, whatever built it. Content that a script fetches and inserts after the page has loaded is not in that response, so it arrives in the source language.
What this covers in practice
Translated, because it is in the page already: content from a page builder, a theme template, a shortcode, a server-rendered framework, or a CMS query. It does not matter that a builder generated it or that the markup is unusual. If it is in the HTML, it is translated. See Page builders.
Not translated, because it arrives later: search results fetched on typing, product lists that reload when a filter changes, cart contents, comments loaded on scroll, anything rendered by a client-side framework in the browser rather than on the server.
The quick test. View source on the page, rather than using the inspector. What you see there is what Universally sees. The inspector shows the page after scripts have run, which is why text can look present and still go untranslated.
Working with it today
Server-render what matters. Content that matters for SEO or first impressions is better rendered server-side anyway. Most frameworks and page builders can, and doing so brings it into scope here at the same time.
Send the strings yourself. For interface text your front end owns, /v1/translate/strings translates a list of strings and returns them keyed by source, which suits labels, buttons and states that never touch the server. Cache the result and reuse it. See Integrate using the API.
Keep dynamic regions out of the way. If a widget is going to stay in the source language, exclude it so it is not half-translated and confusing. See Include and exclude CSS selectors.
What is coming
Compatibility with dynamic content is being expanded, so more of what currently arrives after load will be handled without any work on your side. There is no date to quote for it.
Until then the API is the supported route for anything your own code renders, and it stays the right tool where you need control over exactly when a string is translated.