There’s a video explaining it on the front page, but here’s how it works: it creates a “fingerprint” of your image based on the pixel structure. Then it compares it to the “fingerprint” database it already collected. This type of search allows for pattern recognition and incomplete matching, which in turn allows it to return even altered images as results. I don’t know does the algorithm works and probably will never too – just like Google – it’s a trade secret. But from the test results, this really works. And will probably continue to work even better as the “fingerprint” database grows and the algorithm gets refined.