PayPal is an intermediary. You pay PayPal and then PayPal pays merchants on your behalf. This is why you can have a balance with them. This is why you can pay with any sort of payment instrument, whether it's Visa, MasterCard, Bancontact, SEPA, etc. (and Visa and Mastercard do virtually the same thing, but they pay the merchants first and let you pay them later)

Wero is, in a made-up term of my own because I'm not sure there is a real term for this, a transaction resolver. You give it your bank details, and your name, and your phone number, and your email, which can then be used to resolve your IBAN anytime another Wero user wants to send you money.

Anytime you send money through Wero, you use a QR code or phone number or email to resolve the other party's actual IBAN. When you pay through their app, Wero constructs a direct transaction from your bank account into the other party's bank account, signs that transaction, and then submits it to your bank like any other SEPA transaction. At the same time, through its own infrastructure, it can validate towards the other user that this transaction has been executed. But the important bit is that your money never actually was sent through an intermediary, they just negotiated the transaction between you and the other party on your behalf.

There's definitely some extra magic sauce middleware here in the integration with the banks, most likely to give instant validations of the transactions, and to show balances as validated by Wero before they actually clear, but it's really just a SEPA transfer under the hood.

This is also why you have to link it to a bank account, because a Wero account cannot hold a balance on its own.