it uses mobile substrate:

MobileSubstrate is a few system shared dynamic libraries (.dylib files, similar to Windows .DLLs) that allows developers to write programs that extend programs they didn't write.

For example, SpringBoard, the iPhone/iPod Touch "shell" (basically the program that allows you to launch applications) has code in it to launch applications whenever you tap their icon. Using MobileSubstrate, you can write a program that will "inject" itself into this code, so that instead of running the ORIGINAL code that SpringBoard provides, YOUR code will be run.
In the case of the SpringBoard app icon launch code, instead of launching the app, tapping the icon would do something completely different.
In this way, you can modify the behavior of other people's applications (even Apple's built in apps), without having their source code.

MobileSubstrate loads 3rd-party .dylib files ("MS extensions" or "MS libraries" or "MS plugins") and injects them into the programs that they target. Since developers make mistakes, it's entirely possible that injecting a faulty MS extension into SpringBoard will make SpringBoard crash (and then you would need to reboot your phone).
Because this may happen, MobileSubstrate ALSO provides a "safe mode" for SpringBoard that will DISABLE ANY 3RD PARTY MS EXTENSIONS.
This is similar to Windows' safe mode, where it disables all drivers upon system startup. MobileSubstrate AUTOMATICALLY activates its safe mode when it detects that SpringBoard has crashed (due to one of the installed MS extensions). When MS's safe mode is active, you can remove any bad extension that is crashing SpringBoard. After rebooting your phone, safe mode will not be active and all MS extensions will work normally.

MobileSubstrate, written by Saurik, is a required component (aka Dependency) of many jailbroken programs, such as Winterboard, QuickGold, SBSettings, Five Icon Dock, Clippy, Backgrounder, etc.

Source: http://www.ifans.com/forums/threads/...strate.103583/