Does Handoff require Bluetooth?

I recently purchased an iPad Air 2 with cellular service and have been using Handoff to answer phone calls on my iPad while around the house. What are the requirements for this? Do the devices just have to be on the same wifi network? If not on a wifi network, does this function over cellular of Bluetooth?

I think it's a sweet setup, just wondering about what was behind the scenes. Thanks for any answers!