It uses a saturation transformer. It means that the magnetic field of the transformer reaches the saturation point, and thus it is not possible to pass a voltage higher than the rated amount.
It doesn't just protect you from short spikes, it protects you from ANY voltages higher than it's rating for ANY length of time. They're pretty cool line conditioners. Put in 400 VAC you get out 240 VAC Draw it's rated current for about 1 hour and it'll probably burst into flames, but you'll never get more than 240 VAC out.
They are typcialy designed to reach saturation at a input voltage slightly lower than the rated output, so maybe 200 would come out at 240, but that would be around the bottom limit if it did.
Cya,
Chris