Power meters have two parts. The sensor that determines the power output, the the display/record unit that mounts on the handle bar.
These two parts connect wirelessly using ANT+ wireless technology
The meters comes in a few different types. There is a pedal meter, where the measuring device in in the pedal, there are some that are built into the crank arm and some are in the rear wheel hub. They all do the same thing, measure how much power is being sent through the drivetrain by the rider and send that information to the display so the rider can see how much power they are generating