From the product description:
"It instantly detoxifies ammonia produced by fish waste. It removes chlorine and chloramine from tap water. Remember, ammonia is not removed, but Ammo-Lock 2 simply converts ammonia to a non-toxic form. The biological filter will consume the non-toxic ammonia converting it to nitrite and then to nitrate. Treats 960 U.S. gallons of fresh or salt water."
Consider it something like a binding agent. It doesn't make the ammonia non-toxic b/c it removes it, but because it adds something to it. Most liquid additives are similar.