What is the operating principle of a compression-release engine brake (commonly known as a Jake Brake)?

1. It locks all engine valves shut permanently to stall the engine
2. It dumps fuel into the exhaust to ignite a counter-thrust flame
3. It opens the exhaust valves near top dead center of the compression stroke, releasing compressed air into the exhaust and preventing energy return to the piston
4. It shifts the transmission automatically into neutral