Standard paper cups are made from flat cardboard which is heavily 'sized' - treated with chemicals to make it water resistant. A thin layer of plastic film is then laminated to the cardboard in order to make it waterproof. The laminated cardboard is then formed into a cup shape and welded together.
Frugalpac cups are made from plain recycled cardboard that is untreated by chemicals. It is formed into a cup shape and then glued together. A thin plastic liner is welded into a cup shape and then lightly glued into the cup. The top of the liner is then rolled over the lip of the cup to protect it in use.
Because the liner is so lightly glued in place it separates easily in one piece when the cup is being re-pulped. And because the paper in untreated with 'sizing' chemicals it re-pulps quickly.