There are several ideas about how it works. In short: it promotes blood flow, relaxation of muscles and healing.
Traditional Chineses Medicine, TCM describes many acupuncture points in the skin that stimulate the flow of qi or life force. TCM calls the channels meridians.
Acupuncture is a form of intramuscular stimulation. Fine needling releases muscle trigger points to enable the whole muscle to stretch properly. Muscles and organs are covered in elastic tissue called fascia. Myofascial release occurs both through slow stretching and acupuncture. I always include acupuncture as part of holistic body treatment. We often need to resolve posture imbalance as well as to improve our energy levels. Acupuncture calms the nervous system and improves blood flow.