So I noticed in a video posted by Xterminator, link as follows: https://youtu.be/vR6asPcSsPE?t=190, red circuits are going into the belt despite it clearly being clogged. Now my concern is, where are these items going? Are they being eaten by the belts/being removed? I'd like to know this before I use this as I'd rather not have my whole production being eaten the second my belts get clogged.

From the documentation:

Each loader is connected to an invisible chest. Periodic Lua scripting teleports items from the chest on the surface to the matching chest underground, or vice versa

The items are going into a buffer chest, and they will stop flowing when the buffer chest is full. Buffer chests are automatically sized to hold approximately 10 seconds worth of items, based on the speed of the belt. If you mine the connectors, any items in the buffer will be returned to your character's inventory, or spilled on the ground if your inventory is full.