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How does SQL server 2012 still work after changing the Service account to a domain account or even a local account. For example: as mentioned in MSDN

https://msdn.microsoft.com/en-us/library/ms143504.aspx#VA_Desc

This folder Instid\MSSQL\data has full control privileges to the virtual account NT service\MSSQLSERVER. But I am confused how SQL server still starts after changing the service account to a domain or local account as this new service account will not be having privileges to this particular folder unless we explicitly provide it. And from what I tested, SQL Server fails to start if you remove NT service\MSSQLSERVER from Instid\MSSQL\data folder's permissions.

So does this mean any account which is a SQL server service account is automatically added to NT service\MSSQLSERVER group?, How does this work?

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As long as you change the service account being used by using the SQL Configuration Manager, then it will configure all the necessary permissions for the new service account.

https://msdn.microsoft.com/en-us/library/ms143504%28SQL.110%29.aspx#Serv_SID

Note that the mechanism that happens under the hood to grant these permissions has changed with the different versions of SQL, according to this discussion: https://social.msdn.microsoft.com/Forums/sqlserver/en-US/9e6bb2de-8fd0-45de-ab02-d59bbe05f72e/servicedatabase-accounts-nt-servicemssqlserver-nt-servicesqlserveragent-what-are-they-for?forum=sqlsecurity

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