How most inverse ETFs work is through futures contracts. Let’s say you have a financial instrument (like a stock) which you think will go down a lot. A futures contract lets you set a price to buy/sell the stock at a future date.
If you make a bet that’s wrong on an individual stock, you’ll lose a whole bunch of your investment. However, if you have an ETF that holds hundreds of stocks, one wrong pick won’t affect it too much.
On top of that, you should probably only allocate a small part of your portfolio to inverse ETFs (it’s increasingly harder to time the market based on past performance).