I was in estimating this myself and part of the problem is that 3d printed plastics are just too tough to shred down through conventional means in many cases. A shredder may work for flat PLA parts like rafts or support material, and a blender may help, but getting small consistent shreds for more complex and dense parts can be challenging. This means using a metal shredder. A powerful blender might be viable for smaller parts that aren't too dense, but you will have to sift them to get consistent grain sizes and regrind anything too large. You could certainly make something a lot cheaper than their shredder that does a decent job, but might require a lot more upfront work and time from you

Then for melting, you might need to use a plastic filter to catch any particulate like dust or sand that has made it in as they might clog a nozzle. Also, you kinda HAVE to use virgin pellets (PLA or other plastic which hasnt yet been remelted), as every melt both degrades the plastic slightly and can evaporate the plasticizers, the additives which make the plastic flexible and tough instead of brittle.

The spoolers typically use a optical sensor which uses infrared light to sense the thickness of the outgoing plastic and speed up/slow down to stretch the plastic more or less as it spools. Usually the nozzle is much thicker than the final filament diameter so that the stretching brings the filament to it's final diameter. Cooling fans cool it down before it makes it onto the spool. Sometimes water is used to cool it down faster but you will probably need to dehydrate the filament to avoid degradation.

You could probably make your own melter and spooler for maybe 300-500. A lot of the cost in such a system comes from the bearings, gearbox, motor, and auger assembly used to melt the shredded plastic and pellets, as it requires a fairly high pressure to feed, and might require custom parts to properly mix the plastics as they go through the melt zones - the high viscosity means they don't mix very well without a fairly narrow gap from auger to wall, which means more pressure required and a stronger motor/gearbox, as well as a slower production rate. The one used in this product doesn't seem too good compared to what I've seen for more hobbyist scale use; the Felfil seems more for research use and small scale tests with small amounts of material. There's also a huge markup which also likely includes engineering costs.

The cost is what typically makes it nonviable. Most hobbyists don't produce waste on large enough scale for it to be viable. Why spend hundreds on a substandard and slow filament production setup when you could buy decent quality filament for the same price? Especially when you're someone who only goes through a few (<20) spools a year. Even for self built systems which can undercut this by a lot, it's not exactly realistic.

For people running print farms it makes sense because they pay a huge margin on top of the material cost for the production of the filament, and they typically have more material to recycle to begin with

I mean, can’t you just use an old blender to grind pieces down far enough for the pellet extruder?

Whenever you do anything at an industrial level, you want things to be just right and repeatable. Too large of a shred and parts won't fit thru the openings in the extruder. Too small and they might get into places they're not supposed to. I'm sure there are other failure mechanisms I don't even know. Regardles, you want the particles in the right size range for the extruder.

The spooler? I'm not sure about that one. That doesn't make sense to me. The Recreator (http://recreator3d.com/) project makes the entire slice/heater/spooler out of an Ender 3 and some printed parts. Depends on what you're spooling. It's probably more expensive than the Recreator, but I'm still intrigued. The filastruder setup that CNC kitchen demonstrated had a laser sensor with integrated feedback loop, so I guess it's more. https://youtu.be/vqWwUx8l_Io?si=cyNdJD10U1tUrrTt

When I looked into this a couple of years back, the prices for ready-made filament extrusion setups looked like the target market was small business rather than individuals. And the recommended DIY method for breaking down plastic if you didn't have a machine shop was to get a paper shredder with metal blades (one of the models capable of shredding optical disks).

Much simpler to recycle printer waste into slab material. Or send it to a manufacturer that does recycling. Unless you're generating at least tens of kilos of waste a year, you're unlikely to break even any time soon by re-extruding, assuming the resulting filament is usable at all (ensuring consistent diameter and near-perfectly round cross-section is probably a PITA).

I have no experience with this directly, but as far as I understand the subject, you need size consistency of the input material because the melt time is important if the size is mixed, the small stuff will be different than the big stuff and make an inconsistent output. Overcooking is a bad thing. This is not a batched process, it is continuous so; mixed in = mixed out.

As far as I understand it, the spooler is pulling the material in tension and this is what sets the actual filament diameter by adding or removing a very precision amount of tension.

All this stuff costs so much because this is a specialised equipment. It is sold at low volume and to keep the business afloat manufacturers have to charge a premium.