to the best of my knowledge it runs on a gyro that senses the movement. Very much like the ones in laptops which cause the hdd to lockup when the angle of the machine goes beyond a certain point to avoid damage. ie. if you drop it while in use.
So, you hold the mouse in the air and it senses the side-side, front-back angles of movement.
That's my understanding. Could be wrong. Been there b-4, be there again too.
<font color=blue> Failure is not an option -- it comes bundled with Windows. </font color=blue>