I'm no expert but I believe this is how these game streaming services encode lag free:

A standard video encoder does not know what is coming in the next frame - it could be a minor change or a cut to a new scene - so it must scan each frame and compare it to the previous frame to discover the differences. This scan for differences is the most time consuming part of the encoding process and introduces lag.

With a video game streaming service like the one above, a special encoder hooks into the game code and video driver so that it knows in advance what parts of a frame have changed from the previous frame. This dramatically reduces lag, allowing even fast action games to be played via a compressed video stream.