The heart rate sensor in Apple Watch uses what is known as photoplethysmography. This technology, while difficult to pronounce, is based on a very simple fact: Blood is red because it reflects red light and absorbs green light. Apple Watch uses green LED lights paired with light‑sensitive photodiodes to detect the amount of blood flowing through your wrist at any given moment. When your heart beats, the blood flow in your wrist — and the green light absorption — is greater. Between beats, it’s less. By flashing its LED lights hundreds of times per second, Apple Watch can calculate the number of times the heart beats each minute — your heart rate.
The document also explains other conditions and factors that may influence the sensor:
Many factors can affect the performance of the Apple Watch heart rate sensor. Skin perfusion is one. A fancy way of describing how much blood flows through your skin, skin perfusion varies significantly from person to person and can also be impacted by the environment. If you’re exercising in the cold, for example, the skin perfusion in your wrist may be too low for the heart rate sensor to get a reading. Motion is another factor. Rhythmic movements, such as running or cycling, give better results compared to irregular movements, like tennis or boxing.