For ntsc vhs players it wasnt a component in the vcr that was made for copy protection. They would add garbled color burst signals. This would desync the automatic color burst sync system on the vcr.
CRT TVs didn’t need this component but some fancy tvs would also have the same problem with macrovission.
The color burst system was actually a pretty cool invention from the time broadcast started to add color. They needed to be able stay compatible with existing black and white tv.
The solution was to not change the black and white image being sent but add the color offset information on a higher frequency and color TVs would combine the signals.
This was easy for CRT as the electron beam would sweep across the screen changing intensity as it hit each black and white pixel.
To display color each black and white pixel was a RGB triangle of pixels. So you would add small offset to the beam up or down to make it more or less green and left or right to adjust the red and blue.
Those adjustment knobs on old tvs were in part you manually targeting the beam adjustment to hit the pixels just right.
VCRs didn’t usually have these adjustments so they needed a auto system to keep the color synced in the recording.
The story is a joke. Literally. The version I herd decades ago was a guy keeps buying for everybody but the Jew at a table who ends up owning the bar.