How does the proximity sensor work?

Two components make it work:

1) An infrared LED light (infrared is a color that is not visible to the naked eye)

2) A light sensor (covered with a translucent film to block most non-infrared light)

When the emitter shines infrared light onto your skin, the sensor sees the light bouncing back. That's how it detects your face.

You can see the emitter in action by pointing another cameraphone at your phone while yours is on a call (make sure speakerphone is disabled). You'll see the infrared light flickering around the earpiece. You can see it because the camera phone's LCD isn't meant to output infrared and it shows a visible color instead. It's very easy to see an iPhone 4 emitter this way. However, for some reason it's very difficult to see the emitter on an iPhone 5.

iPhone 4 proximity sensors seem to be very flaky. I believe the sensor often detects light from sources other than the infrared emitter. Most people say it works better when the area is masked with a darkened film (even clear tape that has been colored with a Sharpie marker).

The proximity sensor is above the receiver at the top, you can see it clearly on the white iPhone.

http://en.wikipedia.org/wiki/Proximity_sensor

Infrared isn't a light it is an item on the electromagnetic spectrum

It detects thermal or heat or infrared rays but annoyingly we don't get to see what it sees