When testing on BrowserStack, most URLs are routed through BrowserStack’s network and only hosts that cannot be resolved publicly are routed through your network.
When you enable “Resolve all URLs through my network”, BrowserStack creates a secure tunnel between your machine and the remote test machines. All public and private URLs are then resolved through your network, and each response is passed back to BrowserStack through this secure tunnel.
This additional routing introduces multiple network hops, which increase page load and interaction response times and results in slower test performance.
For more details on how this feature works internally, see Local Testing Internals.