That's a good diagram of how typical hydraulic lifters work.
Basically, a hydraulic lifter is a self-adjusting type of lifter, that is designed to take up any lash in the valve train which might occur from heat expansion or for any other need.
This is set by "pre-loading" the lifter to be able to have enough distance to make the necessary length adjustments to cope with any lash changes during normal operation.
When I look at things like this, I don't only look at "how they work".
I look at what happens when they don't work.
One of the limitations of a hydraulic lifter design comes in high performance applications.
In theory, any amount of pre-load that you have adjusted into your hydraulic lifters can be "pumped-up", causing the lifter to be too long, if certain things occur during the higher rpms of your rev range. If there is any pushrod flex, or momentary valve float in the valve springs, which can occur in high rpm conditions like racing, then the hydraulic lifter treats this the same way as it treats normal valve lash, and takes up the distance by becoming longer. This "pump-up" then makes the lifter longer than it should be, and it holds the valve off the valve seat, losing alot of power and potentially burning a valve.
As you reach near your limits of valve train stability, it doesn't all happen at once. You may start to see some pushrod flex or momentary valve spring float at rpms lower than your theoretical maximum rpm. And the hydraulic lifter will take up this distance and them become too long, and you'll then lose power from compression leakage at the valves.
Most people generally consider hydraulic lifters to be suitable to 5500-6500 rpms. Above those rpms, there are some "anti-pump-up" types of hydraulic lifters that can be used, or most people then switch to a solid tappet, and if they have roller tappets they switch to a solid roller tappet. This solves the rpm limitations that are seen at higher rpms in hydraulic tappets.
In the UCE, the rpm range is well within the ability of a hydraulic tappet to handle. it's a good quiet system, and is not going to have pump-up problems in this normal application.
For a racing application in which rpms higher than 6000 rpm are contemplated, it would be prudent to switch to a solid roller tappet to avoid "pump up" issues with the hydraulic ones.
This is a well-known issue that is discussed often in racing communities. The rule of thumb is hydraulics are ok under 6000 rpm, and use solids at higher rpms. There are ways to modify hydraulic tappets to "act" like solids, but that's another topic. At that point, you may as well just install solids.