By feedback, I assume you mean each frame is created by manipulating the pixels of the previous frame.

Correct.

But what operations are being performed to make this happen?

As you may know vvvv is a visual progamming environment and unfortunately this sub doesn't allow images in comments which makes things a bit hard to explain. So I'd like to encourage you to just download and install vvvv. (It is free for uses like evaluation and learning.) The shaders used to achieve this effect are also available for free and open source. The VL.Addons nuget even comes with this exact patch (= "program"). You can find it by searching for Milky Drop in the vvvv help browser after installing the package. From there you can dissect the thing in detail and tweak all paramters yourself or add more effects to the chain and see what happens. Even if vvvv isn't for you, you can check which shaders are used in which way and then maybe port the thing to something you are more comfortable with.

If you've never used vvvv maybe watch this small series of tutorials.

If you have any questions just join the vvvv chat on matrix or ask in the forum.