A different method for playing over chord changes - can someone explain to me?

In my limited ability to play over chord changes, I always move the CAGED/scale shapes around to match the chord. So, for example, if I'm playing a G major pentatonic, I move pentatonic position 1, from the open string position (rooted on 3rd fret), to start on the second fret (rooted on 5fth fret). But I recently watched a Brett Papa video that shows a very different method, where he seems not to move his CAGED/pentatonic shapes at all, but simply imposes the chords over the shapes, and adds in those additional chord notes to the existing pentatonic shape. See the below video at the ~ 12 min mark. He also says that in this manner we are playing in "modes" without realizing it. Can anyone explain this?

https://www.youtube.com/watch?v=SQEFma0Fj2Y&list=PL0dnlCT0P8EtH34k5YMtesYITb3DwDcJk&index=224