Every typing engine has to answer one design question: what happens the instant you notice you've made a mistake and fix it? TypeClash's answer is a positional diff - at any moment, every character you've typed is compared against the same position in the target text, live, as you type. Correct, incorrect, or not-yet-typed. That's it.
Which means backspacing doesn't erase the mistake from history - the run doesn't have amnesia. What backspacing does do is cost you time and keystrokes that a flawless typist never spent. You typed the wrong letter, noticed, deleted it, and retyped the right one: that's three actions where a clean run only needed one. Your net WPM (built off correct characters over time) absorbs that cost automatically, because the clock never stopped for your correction.
This is why "I would've hit a much higher WPM if I hadn't messed up that one word" is almost never true the way people think. The mess-up isn't a one-time tax - every correction is its own small race against the clock, stacked on top of the race you're already running. Elite typists aren't just accurate. They're efficient about which mistakes are even worth stopping for - a lot of top-tier typists let small errors ride rather than break their rhythm to fix them, because breaking rhythm has a cost too.
Next time you catch yourself backspacing three times in one word, that's the real signal - not that you're inaccurate, but that you're spending more time managing mistakes than making progress.