The legs on the bottom of the Leak Sensor are electrical contacts, and when something conductive (like water) touches them, it registers as a short circuit. That's also why the sensor will not work if you use it in a metal pan - metal is a conductive surface that triggers the sensor.
The sensor also comes with a cradle and a remote probe to monitor hard to reach areas.
After a leak is detected, your sensor will sound an audible alarm on top of sending a message to your Z-Wave hub. That way, you can react to a leak even if your power goes out and your hub is offline.