For a good in-depth tutorial of all things related to PIR motion sensors you can check out this page by adafruit: http://www.ladyada.net/learn/sensors/pir.html
I will attempt to give a brief summary here.
Passive Infrared (PIR) motion sensors work by detecting the movement of heat. They detect heat with a pair of pyroelectric elements that turn the incoming heat into a small electrical signal. The pyroelectric elements are wired in the opposite polarity to each other. So the signals normally cancel each other out. But when a heat source moves in front of the sensor, it creates a series of positive and negative pulses that are detected by the microprocessor. The PIR sensor then outputs a HIGH signal to indicate that motion was detected. This signal can then be used to trigger other circuits such as lights, alarms or cameras.