It's got two antennae, one vertical and straight, one a flat loop. Your hands in the space around the antennae end up affecting the electromagnetic fields around the antennae (technically acting as a capacitor), and changing the current in the wires. One hand controls pitch, and the other volume. That is the full extent of my knowledge of how they work, despite reading a paper with a full circuit diagram. :-P
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http://en.wikipedia.org/wiki/Theremin
It's got two antennae, one vertical and straight, one a flat loop. Your hands in the space around the antennae end up affecting the electromagnetic fields around the antennae (technically acting as a capacitor), and changing the current in the wires. One hand controls pitch, and the other volume. That is the full extent of my knowledge of how they work, despite reading a paper with a full circuit diagram. :-P