In terms of blockchain gambling, is this truly a way to be able to ensure that Casinos are not cheating? I do not know much about it and how the two can work in conjuncture with each other.
It's like other provably fair algorithms but instead of using a server seed and a client seed to generate random numbers it relies mainly on block or transaction hashes as source of entropy. If implemented correctly (you have to verify this) then it can guarantee that the results are fair and the casino didn't manipulate them. Some casinos use smart contracts to automate everything and store all information on the blockchain so no one can change them.