This module uses a ultra-bright infrared (IR) LED and a phototransistor to detect the pulse in your finger. The red LED then flashes in time with your pulse.
Working principle:
Shine the bright LED onto one side of your finger while the phototransistor on the other side of your finger picks up the amount of transmitted light.
The resistance of the phototransistor will vary slightly as the blood pulses through your finger.