Written either by Microsoft or the vendor of the hardware, any number of filter drivers [1] can be added to Windows.
The Windows Dev Center - Hardware pages explain upper and lower filter drivers in detail.
A lower level filter modifies the behavior of the camera hardware (e.g. watching for interrupt packets from a camera switch) and fits between the function and bus drivers.
An upper level filter typically provide added-value features for a camera, such as additional processing of the video stream (e.g. colour changes, identification of objects, applying overlays), and fit between the function driver and the user application that has connected to the camera.
For example, an ACPI bus filter is added to support power management for each device.