http://www.gem-tech.com/
Not to be a smart ass but did you look around the website? It expains how they work.
http://www.gem-tech.com/general.html
To go into detail about the construction would not be wise b/c then people like you and I would be building our own.
But basically is slowly bleeds off the gasses escaping the muzzle so the sound it deadened. I believe some also have a type of "insulation" inside to help.