It's a method of controlling the braking action. Each side of the brake caliper creates a magnetic field. The fields of the two magnets interact with one another, and create an interference pattern. At some points, the fields add to one another to create a stronger field, at other points the fields actually oppose one another to create a weaker field. By adjusting the caliper position, the field strength can be adjusted, making it possible to effectively turn the brake "on" or "off" mechanically.
No, I don't completely understand how it works. But it does!
--Dave Althoff, Jr.