Apple, via MacStories:
The heart rate sensor in Apple Watch uses what is known as photoplethysmography. This technology, while difficult to pronounce, is based on a very simple fact: Blood is red because it reflects red light and absorbs green light. Apple Watch uses green LED lights paired with light‑sensitive photodiodes to detect the amount of blood flowing through your wrist at any given moment. When your heart beats, the blood flow in your wrist — and the green light absorption — is greater. Between beats, it’s less. By flashing its LED lights hundreds of times per second, Apple Watch can calculate the number of times the heart beats each minute — your heart rate.
I tried a Watch yesterday and I asked the trainer who was there how accurate the heart rate monitor was. He said that he had no first-hand comparative experience, but added that the development of the Watch was extensive, so he thought it was likely good. He also told me that the Sport model does not feature a laminated display.