It works the same as normal air conditioning, which is basically just like the fridge in your house. It's done through a refrigerant gas which has a low boiling point and is compressed and circulated through a coil. I work in the heating and AC industry but without showing you a diagram I'm finding it hard to explain. If you're really interested check this site,
http://www.dhclimatecontrol.com/ac.htm#101
The
inside coil on the diagram would be in the air duct of your car and as the air is blown across it, it is cooled down and into the car.