Magnets. How do they work? We're going to guess magic. This particular set of magnets are pretty darn strong, are able to rotate freely, and conduct electricity. That's a pretty darn good kind of magic, if you ask me.
This is the LilyPad Arduino SimpleSnap Board. It's controlled by an ATmega328 with the Arduino bootloader. It has fewer pins than the LilyPad Arduino Main Board, a built in battery, and button snap connectors!