Here's a short video of the internals.
http://www.youtube.com/watch?v=7csDTkZMYM4

It changes gears when you let go. If you let go after one click, it'll shift into a smaller cog (harder to pedal). If you let go after 2 or more clicks, it'll shift into a larger cog (easier to pedal); 2 clicks -> 1 gear easier, 3 clicks -> 2 cogs easier.